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Claim Construction

March 17, 2015

When can a district court's factual findings related to the extrinsic evidence in a claim construction determination not be given deference by the Federal Circuit? At least one situation is when the findings do not "override" "the totality of the specification," especially when the specification "clearly indicates . . . the purpose of [the] invention . . . ." This is what the Federal Circuit held earlier this week in the Enzo Biochem Inc. v. Applera Corp. case. Writing for the majority, Chief Judge Prost noted that the intrinsic evidence for a patent related to modifying polynucleotides to be used with nucleic acid probes suggested that the claims could only be directed to detection by indirect means (such as with biotin/avidin or antibody/antigen complexes). As a result, the District Court's claim construction was vacated, as was the jury verdict of infringement, and the case was remanded for further findings based on the new claim construction. Judge Newman dissented, pointing out that if the expert testimony was given its proper deference, the correct outcome would have been affirmance.

This case has been going on for over 10 years (2004), when Enzo and Yale University filed suit against Applera and Tropix for infringement of U.S. Patent No. 5,449,767 (the '767 patent), among others, in the U.S. District Court for the District of Connecticut. In fact, this is not the first time this case has been before the Federal Circuit. In 2010, this Court reversed a summary judgment determination that the '767 patent was invalid, although the invalidity and non-infringement determination of other patents were upheld (see "Enzo Biochem, Inc. v. Applera Corp. (Fed. Cir. 2010)"). Ultimately, the case went to trial, and the jury returned a verdict for Enzo in the amount of around $48.5 million. In early 2014, Judge Arterton added pre-judgement interest in the amount of around $12.5 million, for a total of around $61 million.

The '767 patent was directed to "Modified Polynucleotides and Methods of Preparing Same." As the opinion explains, these modified polynucleotides can be used in probes, which can be used to identify the presence of nucleic acids in a sample. For example, these probes can be used to sequence DNA. Previously, the probes were labeled with radioactive isotopes, although this was not ideal because they were hazardous, expensive, and unstable. Measuring the radioactive signal was a form of direct detection. The polynucleotides of the present patent instead contained a nucleotide with a constituent "A" that was "at least three carbon atoms and represent[ed] at least one component of a signaling moiety capable of producing a detectable signal." At issue was the District Court's claim construction of this term from 2006, as well as the phrase "signaling moiety." Put simply, the issue was whether the claim terms covered just indirect detection, or both direct and indirect.

Independent Claim 1 was (with the relevant language underlined):

1. An oligo- or polynucleotide containing a nucleotide having the structure:

wherein B represents a 7-deazapurine or a pyrimidine moiety covalently bonded to the C1 '-position of the sugar moiety, provided that whenever B is a 7-deazapurine, the sugar moiety is attached at the N9 -position of the 7-deazapurine, and whenever B is a pyrimidine, the sugar moiety is attached at the N1 -position of the pyrimidine; wherein A comprises at least three carbon atoms and represents at least one component of a signaling moiety capable of producing a detectable signal; wherein B and A are covalently attached directly or through a linkage group that does not substantially interfere with the characteristic ability of the oligo- or polynucleotide to hybridize with a nucleic acid and does not substantially interfere with formation of the signalling moiety or detection of the detectable signal, provided also that if B is 7-deazapurine, A or the linkage group is attached to the 7-position of the deazapurine, and if B is pyrimidine, A or the linkage group is attached to the 5-position of the pyrimidine; wherein one of x and y represents

and the other of x and y is absent or represents --OH or --H; and wherein z represents H-- or HO--.

The Court started with the language of the claim, noting that "at least one component" indicates that the signaling moiety has multiple parts. Also, the fact that the attachment of "A" does not interfere with the formation of the signaling moiety suggests that the claimed compound does not include a "formed" signaling moiety. Judge Newman pointed out, however, that the use of the phrase "at least one" has been consistently interpreted to mean "one or more." Also troubling was the context of claim 1 in relation to its dependent claims. The first set of claims was drawn to indirect detection embodiments, such as claim 3:

3. An oligo- or polynucleotide of claim 1 wherein A is a ligand.

Claim 67, however, represented a set of dependent claims that were drawn to direct detection.

67. An oligo- or polynucleotide of claim 1 or 48 wherein A comprises an indicator molecule.

If claim 1 can have dependent claims drawn to both direct and indirect detection, the District Court reasoned, the claim certainly cannot be limited to just one of these. The Federal Circuit, however, was dismissive of District Court's reliance on these claims. The Federal Circuit concluded that "dependent claims cannot broaden an independent claim from which they depend." It is unclear, however, why these dependent claims were not be used to define the scope of claim 1 in the first place.

The Court continued by looking to the specification. It is black letter patent law that the description of a preferred embodiment should not be used to limit the claims to that particular embodiment. In this case, though, the Federal Circuit stated that the "background portion of the specification further describes the invention," which was used to support the narrowing of claim 1 to indirect detection mechanisms. The section of the specification cited is reproduced here:

To circumvent the limitations of radioactiviely labeled probes or previously utilized chemical and biological probes, a series of novel nucleotide derivatives that contain biotin, iminobiotin, lipoic acid, and other determinants attached covalently to the pyrimidine or purine ring have been synthesized. These nucleotide derivatives, as well as polynucleotides and coenzymes that contain them, will interact specifically and uniquely with proteins such as avidin or antibodies. The interaction between modified nucleotides and specific proteins can be utilized as an alternative to radioisotopes for the detection and localization of nucleic acid components in many of the procedures currently used in biomedical and recombinant-DNA technologies.

Nowhere in this section does it mention "the present invention," much less can this be considered a clear disavowal of the claim scope that might cover direct detection methods.

The Federal Circuit also pointed to the fact that the specification only discusses indirect detection. However, the Court ignored example 9, which the District Court concluded, "based on expert testimony," teaches direct detection. "[T]his sole factual finding does not override our analysis of the totality of the specification, which clearly indicates that the purpose of this invention was directed towards indirect detection, not direct detection." Whether a claim term can be limited by "the purpose of" the invention is an interesting question, but the Teva case required the Federal Circuit to give deference to findings of fact. Reliance on what an expert says about the meaning of the specification would appear to be just the type of evidence that should be entitled to the "clear error" standard. In fact, Judge Newman pointed out that the majority did not cite to any contrary evidence to support a reversal of the District Court. In addition, she pointed out that the majority also ignored Applera's expert, Dr. Kricka, who conceded on cross-examination that "several parts of the original application disclosed compounds that allowed for direct detection." The Court relied, in part, on the fact that Enzo did not raise this argument on appeal. However, is that significant, especially when the Court was explicitly interpreting claims in view of Teva, yet in a manner inconsistent with the District Court's fact findings.

As much as there was concern in the community when the Teva case came down that attorneys would be motivated to set up as many facts as possible in a claim construction proceeding, it is equally true that appellees should be motivated to cite to the district court's reliance on those factual findings. Conversely, a party seeking to reverse a claim construction determination should establish how the correct construction is clear from the claim language alone, and therefore no deference is due. Perhaps the soundness of these propositions is the best take-away lesson that can be gleaned from this case.

January 22, 2015

It has escaped almost no one's notice that the Supreme Court has spent the past decade or so being much more involved in patent law than in the preceding twenty years. Evident but perhaps less discussed is the change in the nature of how U.S. patent law is now developed as a result. With the institution of the Federal Circuit, the law developed gradually, relatively consistently and as an organic whole (insofar as an area of law subject to disputes between private parties can). With the advent of more frequent Supreme Court scrutiny the law is now episodic, sporadic and much less predictable, with decisions reversing thirty years of established precedent being common and such decisions having a "gotcha!" effect on U.S. patent holders. This is particularly true because of the manner with which the Court has exercised its supervisory authority over the Circuit Court, relying on its own precedents (even those from the pre-Industrial Age) to the denigration of the body of law that had flourished under the Federal Circuit in the intervening time since its establishment in 1982.

We are at another installment of this scenario when contemplating the Court's recent partial reversal of the Federal Circuit's precedent (most clearly enunciated in Cybor v. FAS Technologies) involving the standard of review of claim construction in the district courts. The genesis of this jurisprudence is the Supreme Court itself, which decided in Markman v. Westview Instruments that claim construction was a question of law for a district court to decide, subject to de novo review by the Federal Circuit. While not setting out detailed instructions on how this should be accomplished (a fact that permitted Justice Breyer in the majority opinion in Teva to disavow any complicity by the Court in the purported "error" by the Federal Circuit in how it reviewed the factual underpinnings of the legal questions involved), in that opinion and at that time the Court was content to permit the Circuit Court to apply its "special expertise" in determining the most jurisprudentially effective way of performing its appellate role. As has been clear for some time, those days are over.

Now, in its Teva decision the Court has decided that appellate review of claim construction is limited by Federal Rule of Civil Procedure 52(a)(6), wherein Federal Circuit review of "subsidiary" facts "underpinning" claim construction must be reviewed with deference to the district court and overturned only where there is clear error in the court's decisions:

In cases where those subsidiary facts are in dispute, courts will need to make subsidiary factual findings about that ex­trinsic evidence. These are the "evidentiary underpin­nings" of claim construction that we discussed in Markman, and this subsidiary factfinding must be reviewed for clear error on appeal.

This will arise when "the district court will need to look beyond the patent's intrinsic evidence and to consult extrinsic evidence in order to understand, for example, the background science or the meaning of a term in the rele­vant art during the relevant time period." See, e.g., Seymour v. Osborne, 11 Wall. 516, 546 (1871).

Such deference is not absolute, however: the opinion states that where the district court's construction is limited to the intrinsic evidence, i.e., the "plain meaning" of the claim language, the specification and ("when in evidence") the history of prosecution in the Patent and Trademark Office, then the appellate court's review can be plenary and give no deference to the district court's construction. It is only when there is "extrinsic" evidence (which, up until now has been disfavored; Philips v. AWH) must the Federal Circuit tread lightly on what was decided below and adhere to the deferential standard of clear error.

To be sure there is a logic in the Court's opinion, because indeed when the district court hears expert testimony it engages its capabilities of assessing the credibility of the witnesses and its capacity to immerse itself in the technical minutiae attendant upon construing claims in the first place. This capacity has been enhanced in some cases by some district courts with the practice of appointing "special masters," frequently academics in the appropriate technological field, to advise the court with regard to the frequently arcane subject matter before it in some patent cases. This distinction may have been less pertinent in earlier iterations of the Federal Circuit, wherein some members have had (and in some instances still have) technical backgrounds, and even today seasoned members of the Court become comfortable with a wide swath of technology if only due to their constant immersion in it when deciding the cases that come before the Court. But Justice Breyer is not wrong in recognizing that in some instances the exercise of the district court's experience at trial might make it more likely that its determination of the facts upon which it predicates its claim construction has a better provenance than can be had at the appellate level:

A district court judge who has presided over, and listened to, the entirety of a proceeding has a comparatively greater opportunity to gain that familiarity than an appeals court judge who must read a written transcript or perhaps just those portions to which the parties have referred.

Having drawn these judicial lines, the question for patent practitioners and judges, at all levels, is to decide how to implement them. It is clear that the principal concern for those who advocated that de novo review was both necessary and appropriate was dismissed categorically in Justice Breyer's opinion: that sometimes (and perhaps more often than that) the "factual" determination of what a claim term means will be dispositive of the legal question, the Court stating that "the ultimate question of construction will remain a legal question" and that "be­cause a factual finding may be nearly dispositive does not render the subsidiary question a legal one." But there are other foreseeable consequences that implicate not only the frequency with which district court claim construction determinations will be overturned on appeal but the behavior of the parties (particularly accused infringers) as a result of the Court's Teva opinion.

For example, and particularly when considered in view of the Court's Nautilis v. Biosig decision last term, patentees can be expected to attempt to forestall the need for expert testimony regarding the meaning of claim terms by including express definitions of such terms, such as with glossaries. Concerns about the meaning of claim terms (and that these could be manipulated by "bad actor" patentees) was embodied in the Court's Biosig decision and efforts by the White House to improve then quality of U.S. patents, and the Patent and Trademark Office instituted a pilot program last year to encourage patent applicants to include glossaries in applications submitted to Art Units in certain technological areas. However, glossaries cannot be the entire answer (particularly for patents already in force) and they are also not panaceas even for applications filed after the Teva decision. A good example of the limitations of setting out express definitions in a patent specification is the claim construction outcome in Promega v. Hoffman-LaRoche for the following claim:

Purified thermostable Thermus aquaticus DNA polymerase that migrates on a denaturing polyacrylamide gel faster than phosphorylase B and more slowly than does bovine serum albumin and has an estimated molecular weight of 86,000-90,000 daltons when compared with a phosphorylase B standard assigned a molecular weight of 92,500 daltons. U.S. Patent No. 4,889,818

As might be imagined, the specification contained express definitions and examples for the terms "thermostable," "Thermus aquaticus," "DNA polymerase," "denaturing polyacrylamide gel," "phosphorylase B," "bovine serum albumin," and "molecular weight." But what was not expressly defined was the term "purified" and upon construction of that term hinged the validity of the patent claim. This is because there was a reference, a Ph.D. thesis (reminiscent of the factual situation in the In re Hall case) from the 1970's (half a decade before Kary Mullis invented the polymerase chain reaction that motivated Randi Saiki to isolate Taq polymerase for use in that method) wherein the DNA polymerase from Thermus aquaticus was studied in crude extracts which were, compared to their native state, "purified." When the district court construed the term (not otherwise defined, expressly or inherently) to include preparations at this level of impurity as being "purified," the thesis was properly a reference and the validity of the claim fatally impacted.

The moral: no patent practitioner can ever know what terms must be expressly defined, and the only alternative is to accept a "zone of uncertainty" regarding the scope or validity of patent claims or to burden every specification with every definition of every term that could possibly be relevant in future. In short, both an impractical and impossible standard to hold either patents or patent practitioners to satisfy.

Additionally, the reality is that, expressly defined or not the claim terms will be construed by a district court judge generally without any scientific training or ability. The lay judge will not be in any position to understand, from her own experience, the "ordinary and customary" meaning of claim terms in the claims she must construe, and even definitions may present a challenge if (the specification being directed to those of ordinary skill in the art) the very language used is foreign to her experience. Dictionaries, treatises and expert witnesses may be appropriate and indeed should be encouraged under such circumstances as aids to the court in coming to a construction fair to both the patentee and the public. (And perhaps sources such as dictionaries and treatises may be sufficiently outside the need for weighing of credibility as to be treated for evidentiary purposes as intrinsic evidence and thus fall outside the "clearly erroneous" standard of review, insofar as they can be understood as well by an appellate panel as by a district court judge.) But a district court hearing from one or several experts will then engage in the activities that provided the Supreme Court with its rationale for invoking Rule 52(a)(6) as mandating deferential review before the Federal Circuit. This circumstance is sure to provide motivation for at least one party to wish to avoid having the district court hear such testimony.

Another consequence of the Court's decision in the Teva case is that it will disproportionately affect different areas of technology. Unlike the Federal Circuit practice of attempting to establish technology-independent legal principles, the Teva decision will disproportionately affect more technology-intensive arts, including biotechnology, pharmaceuticals and the high technology sector. This is because in these arts it is even more likely that there will be "ordinary and customary" meaning of the terms that will be understood by the judge and the judge will need to rely more heavily on the type of extrinsic evidence the Supreme Court considers to be involved in determining the "subsidiary facts" entitled to deferential review by the Federal Circuit.

Finally, it is clear that the Teva decision will alter behavior of patentees and patent litigants, either by motivating applicants to attempt to immunize their claims from the effects of the decision with more extensive definitions or, in litigation, for the party that believes there is a technologically relevant term that can be defined to its benefit by expert testimony to make sure that the district court hears that testimony, whether proffered in an expert report or by live testimony. Being litigants, once one party submits such a report or proffers such testimony the other party will be obligated to follow suit, again setting up precisely the situation where the district court's determination of "subsidiary facts" will raise the deference standard of appellate review mandated by Rule 52(a)(6).

The Court's decision in Teva is another example of the Supreme Court applying its view of patent law on the Federal Circuit, which is of course entirely within their purview in our Constitutional system. The propriety of its wisdom in doing so, on the other hand, is much less certain, and once again introduces uncertainty in an area of the law that most (but not, seemingly, the Court itself) understand can least afford it.

January 21, 2015

The recent history of Supreme Court patent cases has made the dissent a seemingly endangered species, the Court consistently deciding important patent cases by 9-0 votes and, at best, garnering concurring opinions for Justices to further set forth their views. In the Teva v. Sandoz decision this trend came to an end, with a dissent by Justice Thomas joined by Justice Alito that challenged both the majority's decision regarding the standard of appellate review for claim construction and Justice Breyer's rationale for reaching this conclusion.

The majority had determined that claim construction was ultimately a question of law but one that could depend on "subsidiary" fact-finding by the district court. According to Justice Breyer's majority opinion, Federal Rule of Civil Procedure 52(a)(6) mandates that an appellate court give substantial deference to district court fact finding and to contravene the lower court's factual determinations only if there was "clear error." In addition, the Court majority asserted jurisprudential policy grounds for its decision, including that the district court was in the best position to assess (expert) witness credibility and to become familiar with the technology involved in the invention.

Justice Thomas disagreed, taking the position that while Justice Breyer and his brethren would have applied the law correctly if there were underlying facts to be determined, in the context of claim construction there are no "subsidiary facts" to be determined and that Teva and the Court misapplied the law in arriving at this conclusion. Simply stated, in the Justice's opinion, Rule 52(a)(6) simply does not apply here.

Justice Thomas believes that the majority did not "engage the 'vexing . . . distinction between questions of fact and questions of law,'" citing Pullman-Standard v. Swint, 456 U. S. 273, 288 (1982), by going back to how the law made these distinctions when Rule 52 was adopted (1937). He notes that the Rules are based on the common law (citing Justice Scalia's concurring and dissenting opinion in Tome v. United States, 513 U. S. 150, 168 (1995)) but finds the pre-1937 law is "inconclusive" with regard to the fact/law dichotomy in claim construction (considering of course only the Court's jurisprudence in the matter). Citing Coupe v. Royer, 155 U. S. 565, 576 (1895); Loom Co. v. Higgins, 105 U. S. 580, 584–587 (1882); Tilghman v. Proctor, 102 U. S. 707, 729–731 (1881); and Winans v. Denmead, 15 How. 330, 339 (1854), the dissent notes that the Court gave "no apparent deference to the District Courts' findings" based on factual considerations but also did not find that any of these decisions were based on a disagreement over such "subsidiary [factual] evidence."

In the absence of determinative (or even illustrative) case law in his survey of the prior law, Justice Thomas discerns that the practice has been to treat district court determinations as "facts" when they are constrained by the issues between the parties, and for district court decisions to be more akin to legal conclusions "the more they define rules applicable beyond the parties' dispute," citing Miller v. Fenton, 474 U. S. 104, 116 (1985); Bose Corp. v. Consumers Union of United States, Inc., 466 U. S. 485 (1984); and Baumgartner v. United States, 322 U. S. 665, 671 (1944). If we are to draw a line between these two categories of district court decisions, he believes that claim construction "fall[s] on the law side of the dividing line."

As the Court did in deciding Markman v Westview Instruments, 517 U. S. 370 (1996) two decades ago, Justice Thomas compared how patent claims are construed with how courts construe other written instruments (specifically, statutes, deeds and contracts), and notes that there is no disagreement on the Court that construing written instruments is a matter of law for courts. In Justice Thomas's view, the closest analogy to patent claim construction is statutory construction, which while assessed for "legislative intent" remains a legal analysis (because the Court cannot be concerned about any particular Member's reasons or motivations to vote for the bill). The Justice also sees similarities in federal land grants (property rights in Federal land) where courts are allowed to consider the historical facts in order to ascertain how to construe the statute without deference.

The reason that statutes are construed as a matter of law not dependent on legislative "facts," according to the dissent, is the scope of a statute, which extends to the public as a whole, and thus "subsidiary evidentiary findings shape legal rules that apply far beyond the boundaries of the dispute involved." Citing The Binghamton Bridge, 3 Wall. 51, 75 (1866), Justice Thomas asserts that the public's interest has "consciously shaped" the Court's rules of statutory construction and that the public interest in patents (and the affect of claim construction on that public interest) is the decisive similarity that mandates de novo appellate review.

The dissent then contrasts review under the de novo statutory construction standard with how deeds and contracts are construed, being private matters where subsidiary facts can be at issue -- based on the need to understand the "intention of the [private] parties," citing Reed v. Proprietors of Locks and Canals on Merrimac River, 8 How. 274, 288– 289 (1850). In those circumstances intent is a factual matter because, according to the Justice, it depends on "real intentions [] embodied in an actual meeting of minds or an actual conveyance of a physical parcel of land -- that have an existence outside the written instrument and that the instrument merely rec­ords" (and even these findings are not always factual). Accordingly:

The question we must ask, then, is whether the subsidi­ary findings underlying claim construction more closely resemble the subsidiary findings underlying the construc­tion of statutes or those underlying the construction of contracts and deeds that are treated as findings of fact. This, in turn, depends on whether patent claims are more like statutes or more like contracts and deeds.

In answering this question the dissent provides a brief history of patents as "an official document reflecting a grant by a sovereign that is made public, or 'patent,'" Marvin M. Brandt Revocable Trust v. United States, 572 U. S. ___, ___ (2014), and explains that originally patents were royal prerogatives, limited ultimately in England by the Statute of Monopolies in 1624. While the patent grant is implemented much differently in the U.S. -- being a power of Congress enumerated in Article I of the Constitution -- a patent remains a grant from the sovereign and thus implicates concerns for the public interest inherent in any such grant.

Looking at patents another way, the dissent notes that patents are ultimately regulatory in nature, by restraining others from "manufacturing, using, selling, offering to sell or importing the patented article,' citing Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U. S. 502, 510 (1917). Because the exclusionary patent right is defined by the claims, any "subsidiary findings" district courts make in construing claims "contribute to rules that limit conduct by the public at large." And in this way patents resemble statutes, according to the dissent, being "governmental dispositions" that "provide rules that bind the public at large." The patentees "intentions" (so relevant to construing deeds and contracts) regarding the scope of her invention are not relevant to this aspect of patenting at all, except "to the extent that they are expressed in the public record," citing Keystone Bridge Co. v. Phoenix Iron Co., 95 U. S. 274, 279 (1877), and Goodyear Dental Vulcanite Co. v. Davis, 102 U. S. 222, 227 (1880). Because of this public effect, having a circuit court perform de novo review of a district court's claim construction "helps to ensure that the construction is not skewed by the specific evidence presented in a given case" and this consistency inures to the public benefit not counterbalanced by any private interest on the part of the patentee.

The dissent also maintains that the nature of the "subsidiary facts" involved in patents versus contract and deeds "differ substantially." With patents, any such "subsidiary facts" are not "historical facts" ("such as what the parties agreed to do or how a given parcel of land is situated"), illustrating this point by stating that how a skilled artisan would understand a term of art is a "legal fiction" used to construe claims and "[having] no existence independent of the claim construction process." Unlike parties to a contract, according to the Justice, the difference between contracts and patent is that there is no "skilled artisan" -- she is a hypothetical construct not an "omniscient factfinder":

Neither is the skilled artisan's understanding a proxy for some external fact that, could the court know it, would supply the meaning of a patent claim. Whatever the scope of the inventor's right under the patent before the introduction of claims, the law has limited that right to the claims as written in the patent [citing Markman].

Accordingly:

Because the skilled artisan inquiry in claim construction more closely resembles determinations categorized as "conclusions of law" than determinations categorized as "findings of fact," I would hold that it falls outside the scope of Rule 52(a)(6) and is subject to de novo review.

Regarding the majority opinion, Justice Thomas cites the majority's reliance on Great Northern R. Co. v. Merchants Elevator Co., 259 U. S. 285, 292 (1922), which involved a determination on the scope of a railway tariff. There, the factual question was referred to the Interstate Commerce Commission, the administrative agency that set the tariff. This was not a case involving the proper judicial actor to best decide the "subsidiary facts" involved as between the district court and an appellate court; "the distinction the Court drew pertains more to an emerging rule of administrative deference than to a definitive classification of judicial determinations."

The dissent then summarizes the legal principle Justice Thomas would apply, that "the nature of the legal instrument dictates our treatment of subsidiary findings." "[A]lthough terms in statutes and regulations frequently have technical meanings unknown outside the specialized community they are meant to regulate, we treat the inquiry into those meanings as involving only conclusions of law,' citing Norfolk & Western R. Co. v. Hiles, 516 U. S. 400, 401–407, 413–414 (1996), and Aluminum Co. of America v. Central Lincoln Peoples' Util. Dist., 467 U. S. 380, 390 (1984). The dissent illustrates the implications (and limitations) of the majority's reasoning by stating that "[i]f claim construc­tion involves subsidiary questions of technical meaning or usage that are indistinguishable from those questions submitted to the jury in the contract context, [] then one might wonder why such issues are not submitted to the jury in the patent and statute con­texts, too."

Justice Thomas also addressed the majority's analogizing of the fact/law dichotomy in claim construction with how the Court has analyzed obviousness: "[b]ut this analogy is even further off the mark because obviousness turns on historical facts about the circum­stances of the invention, rather than on the construction of a written instrument."

Having discussed the legal bases for his dissent, the Justice turned to policy considerations, the most germane of which is that appellate courts are better situated to promote uniformity in the law while district courts are better suited to assessing testimony and evidence (witness credibility, etc.):

To the extent that the construction of a patent claim turns on testimony of expert witnesses, especially live testimony, there is no denying that it falls within the bounds of a district court's special competence. [But, t]he arguments favoring allocation to the district court, dimin­ished by the majority's own prediction [that this will rarely make a difference], are outweighed by the remaining rule-of-law and uniformity considerations that factored into our allocation in Markman.

These principles, for Justice Thomas, are at the root of what judicial review means: "when a judge construes a patent, he is, in a very real sense, 'say[ing] what the law is,'" citing Marbury v. Madison, 1 Cranch 137, 177 (1803), "not just for the parties to the dispute, but for the public at large." Deferring to factual determinations made by a district court in the context of a specific dispute between particular parties implicate the policy consideration that the specific facts of each case can influence the scope of the patent grant against the public. And this can harm the uniformity (in patent law, and in the construction given to claims in particular patents) that de novo appellate review provides:

"Uniformity is a critical fea­ture of our patent system because '[t]he limits of a patent must be known for the protection of the patentee, the encouragement of the inventive genius of others and the assurance that the subject of the patent will be dedicated ultimately to the public.'" Markman, 517 U. S., at 390.

"If the boundaries of the patent right could shift from case to case, then the result would be "a 'zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement,'" citing Markman and Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U. S. 722, 731 (2002). So damaging is this unpredictability that we identified uniformity as an 'independent ' justify­ing our allocation of claim construction to the court" in Markman, supra, at 390.

These considerations lead to the following predictions for the consequences of the majority's decision:

The majority's rule provides litigants who prevail in district court a significant opportunity and incentive to take advantage of this uncertainty by arguing on appeal that the district court's claim construction in­volved subsidiary findings of fact. At best, today's holding will spawn costly -- and, if the majority is correct about the frequency with which these evidentiary determinations make a difference, meritless -- collateral litigation over the line between law and fact.

But I fear worse: that today's decision will result in fewer claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation.

These and other predictions regarding likely consequences of the majority's opinion will appear in future posts.

January 20, 2015

As we reported earlier today, the Supreme Court held in a 7-2 decision authored by Justice Breyer that an "appellate court must apply a 'clear error,' not de novo, standard of review" to the evidentiary underpinnings of a district court's claim construction determination. Teva Pharmaceuticals USA, Inc. v. Sandoz Inc., No. 13-854, slip op. at 1-2 (U.S. Jan. 20, 2015). The Court grounded its decision in Federal Rule of Civil Procedure 52(a)(6), which provides that in matters tried to district court, the court's "[f]indings of fact . . . must not be set aside unless clearly erroneous." But if the answer was that straightforward, why had the Federal Circuit been applying de novo review to all claim construction determinations since the Cybor Corp decision in 1998? The answer, as Justice Thomas writing in dissent phrased it, lies in whether claim construction really involves findings of fact.

In arriving at the conclusion that the appropriate review standard should de novo, the Federal Circuit's Cybor Corp. opinion relied heavily on the Supreme Court's decision in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) (Markman II). That opinion did repeatedly note the factual components involved in claim construction, referring to it as a "mongrel practice" and observing that the issues can often fall "between a pristine legal standard and a simple historical fact . . . ." But, the Supreme Court in Markman II did find "sufficient reason to treat construction of terms of art like many other responsibilities that we cede to a judge in the normal course of trial, notwithstanding its evidentiary underpinnings." Id. at 390. In addition, the Markman II Court stressed the public policy of uniformity, because "treating interpretive issues as purely legal will promote (though it will not guarantee) interjurisdictional certainty through the application of stare decisis on those questions not yet subject to interjurisdictional uniformity under the authority of the single appeals court." Id. at 391. Finally, and perhaps most importantly, the Federal Circuit emphasized the fact that when the Supreme Court affirmed its Markman I decision, it affirmed a decision that used the de novo standard of review.

Nevertheless, the Court today made clear that Markman II did not create, nor argue for, "an exception to Rule 52(a)." Instead, Markman II stood for the proposition that, much like the proper construction of a document is a question of law, the proper construction of patent should be a question of law, which is a task for the judge. And, as the Court explained "sometimes, when a written instrument uses 'technical words or phrases not commonly understood,' those words may give rise to a factual dispute" (citations omitted). Therefore, the Court continued, "Markman no more creates an exception to Rule 52(a) than would holding that judges, not juries, determine equitable claims, such as requests for injunctions."

However, for Rule 52(a) to apply, claim construction must involve findings of fact. Justice Thomas, in dissent, concluded that it does not. We will address the substance of the dissent's argument in a future post.

The Supreme Court also addressed the issue of uniformity, perhaps in response to a criticism raised by the dissent. As Justice Thomas pointed out, "[t]he need for uniformity . . . weighs heavily in favor of de novo review of subsidiary evidentiary determinations." This is because, with a deferential standard, there is a risk that different jurisdictions construing the same claim term might result in divergent constructions. The majority dismissed this notion, however, because "[a]fter all, the Federal Circuit will continue to review de novo the district court's ultimate interpretation of the patent claims." But the Court cannot be suggesting that if differing jurisdictions reach different claim constructions because of different findings of subsidiary fact, the appellate court can simply ignore those findings without identifying clear error. Moreover, issue preclusion will only be available in limited circumstances. Ultimately, in this case, the majority ducked the tough questions by concluding that "subsidiary factfinding is unlikely to loom large in the universe of litigated claim construction."

But is this conclusion true? Or, more importantly, will this conclusion continue to be true? First of all, as the dissent points out, the notion of issue preclusion as a safeguard was already rejected by this Court -- in the Markman II decision. More importantly, if litigants were not necessarily incentivized to raise every possible subsidiary factual issue before, they certainly are now. The result is that the cost and complexity of claim construction is likely to increase, because all parties will now be encouraged to introduce extrinsic evidence, especially expert testimony, in an attempt to maximize deference to a favorable decision. It is also easy to imagine that trial courts will end up relying on this "subsidiary factfinding" to insulate their decisions from deferential review.

Another unfortunate consequence of this decision is that it could embolden patent assertion entities seeking to abuse the patent system with overly broad and vaguely worded patent claims -- the so-called "patent trolls." District courts will be more likely to allow additional discovery related to claim construction, which will only serve to increase the cost of patent litigation. Moreover, under deferential review, district courts may delay claim construction until the end of a case, virtually eliminating early informed settlement discussions. As the dissent put it, "today's decision will result in few claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation." It is this uncertainty that may encourage accused infringers to settle earlier, thereby playing right into the strategy of the prototypic patent troll.

In a 7-2 decision authored by Justice Breyer, the Supreme Court held today that an "appellate court must apply a 'clear error,' not de novo, standard of review" to the evidentiary underpinnings of a district court's claim construction determination. Teva Pharmaceuticals USA, Inc. v. Sandoz Inc., No. 13-854, slip op. at 1-2 (U.S. Jan. 20, 2015). But what are those evidentiary underpinnings? Apparently everyone was in agreement that "when the district court reviews only evidence intrinsic to the patent (the patent claims and specification, along with the patent's prosecution history), the judge's determination will amount solely to a determination of law, and the Court of Appeals will review that construction de novo." Id. at 11-12. In contrast, when a district court consults extrinsic evidence, it "will need to make subsidiary factual findings about that extrinsic evidence." Id. at 12. It is this fact finding that is entitled to deference under Federal Rule of Civil Procedure 52(a)(6). Nevertheless, the Court was clear that "the ultimate question of construction will remain a legal question." Id. at 13. Therefore, "[f]or example, if a district court resolves a dispute between experts and makes a factual finding that, in general, a certain term of art had a particular meaning to a person of ordinary skill in the art at the time of the invention, the district court must then conduct a legal analysis: whether a skilled artisan would ascribe that same meaning to that term in the context of the specific patent claim under review." Id. at 12. Using the present case as illustrative, when the District Court credited the explanation of Teva's expert regarding how a skilled artisan would use a patent figure to determine what a potentially ambiguous claim term meant ("molecular weight"), it resolved a subsidiary factual issue. And because the Federal Circuit did not afford any deference to this finding on review, the appellate court's judgment was vacated, and the case was remanded for further processing consistent with the Supreme Court's opinion.

Justice Thomas, joined by Justice Alito, dissented. He framed the question as "whether claim construction involves findings of fact," and would have held that it does not. TevaPharm., No. 13-854, slip op. at 1 (U.S. Jan. 20, 2015) (Thomas, J., dissenting). Patent claim construction is most closely analogized to statutory interpretation, according to the dissent, "[b]ecause they are governmental dispositions and provide rules that bind the public at large . . . ." Id. at 7. The dissent warned that "today's decision will result in fewer claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation." Id. at 15. Interestingly, this was a concern expressed by several companies that will be directly impacted by this decision. Only three amicus briefs were submitted by operating companies (representing 20 companies in total), but each of these urged maintaining the de novo standard of review because of the impact any change will have on their respective businesses. See "Teva v. Sandoz -- Is Deferential Review a Boon for Patent Trolls?"

Patent Docs will provide additional analysis of this opinion in subsequent posts.

January 01, 2015

After reflecting upon the events of the past twelve months, Patent Docs presents its eighth annual list of top patent stories. For 2014, we identified eighteen stories that were covered on Patent Docs last year that we believe had (or are likely to have) the greatest impact on patent practitioners and applicants. Yesterday, we counted down stories #18 to #15, and today we count down stories #14 to #11 as we work our way towards the top three stories of 2014. As with our other lists (2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look. As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know. In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2014" on January 20, 2015 from 10:00 am to 11:15 am (CT). Details regarding the webinar can be found here.

In March, the Supreme Court granted certiorari in Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. to resolve the question of "[w]hether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires." In October, the Court heard oral argument in the case. 2015 will bring a decision from the Court as to whether appellate courts should afford any deference to a trial court's claim construction determination, and regardless of the Court's decision, Teva v. Sandoz will likely make a return trip to our top stories list (although coming in perhaps a little higher than #14 on next year's list).

In January, the Federal Circuit affirmed a determination by the District Court for the District of Columbia that challenges of patent term adjustment (PTA) determinations by the U.S. Patent and Trademark Office for fifteen Novartis patents were untimely asserted, and with respect to three other Novartis patents, reversed the District Court's ruling that the Patent Office's interpretation of 35 U.S.C. § 154(b)(1)(B) was contrary to law. With respect to the first fifteen patents, the Court noted that Novartis did not file suit within 180 days of denial of reconsideration of the Office's PTA determination, and that Novartis had failed to demonstrate why the 180-day rule should be equitably tolled. The three other patents at issue involved the impact of an RCE filing on the calculation of B Delay. For these patents, the Federal Circuit agreed with the Office that no PTA time is available for any time in continued examination, even if the continued examination was initiated more than three calendar years after the application's filing (in other words, for an RCE filed more than three years after the application filing date). The Court, however, agreed with Novartis that the"time consumed by continued examination should be limited to the time before allowance, as long as no later examination actually occurs. In June, the U.S. Patent and Trademark Office published a notice of proposed rulemaking to implement the Federal Circuit's decision in Novartis v. Lee.

In January, the Supreme Court held in Medtronic, Inc. v. Mirowski Family Ventures, LLC that when a licensee seeks a declaratory judgment against a patentee to establish that there is no infringement, the burden of proving infringement remains with the patentee. The decision by the Supreme Court reversed a Federal Circuit decision from 2012. As we noted in our summary of the Medtronic decision, the case potentially disrupts the balance of power between a patent holder and a licensee. In particular, we suggested that licensees may be emboldened to force patent holders to prove that licensed products or processes infringe the patents at issue, noting that a licensee would have little risk in doing so because a patent holder would not be able to assert counterclaims. Therefore, the best that can be hoped for from the patentee's point of view would be to maintain the status quo, which could end up creating a disincentive for patent holders from entering into licensee agreements.

The Federal Circuit issued two opinions in 2014 that address the judicially created doctrine of obviousness-type double patenting. In April, the Court decided in Gilead Sciences Inc. v. Natco Pharma Ltd. that a patent (in this case Gilead's U.S. Patent No. 5,763,483) that issues after but expires before another patent (Gilead's U.S. Patent No. 5,952,375) can qualify as a double patenting reference for the other patent. Instead of focusing on the issue date, as Gilead argued it should do, the panel majority in Gilead v. Natco focused on the date at which time the invention fell into the public domain. The majority argued that doing otherwise would encourage "significant gamesmanship" during prosecution, explaining that "if the double patenting inquiry was limited by issuance date, inventors could routinely orchestrate patent term extensions by (1) filing serial applications on obvious modifications of an invention, (2) claiming priority to different applications in each, and then (3) arranging for the application claiming the latest filing date to issue first." Thus, in Gilead, the majority fashioned a rule that "the earliest expiration date of all the patents an inventor has on his invention and its obvious variants" should be used for an obviousness-type double patenting analysis. In September, in AbbVie Inc. v. Mathilda & Terence Kennedy Institute of Rheumatology Trust, the Federal Circuit rejected the Kennedy Trust's argument that because of the Uruguay Round Agreement Act (URAA), which implemented a 20-year patent term, the statutory and policy rationales underlying the obviousness-type double patenting doctrine no longer exist. Instead, the Court noted that the doctrine also serves to prevent an inventor from securing a second, later expiring patent for the same invention, and that patents claiming overlapping subject matter that were filed at the same time still can have different patent terms due to examination delays at the USPTO.

December 11, 2014

The pharmaceutical industry has been closing watching the proceedings at the Patent Trial and Appeal Board ("PTAB" or "Board") to see if inter partes review ("IPR") will be a viable option for generic drug companies seeking to challenge Orange-Book-listed patents. On December 9, 2014, the PTAB released two sets of decisions that handed major victories to pioneering pharmaceutical companies. In what is thought to be the first set of Final Written Decisions ("FWDs") of Orange-Book-listed patents, the PTAB ruled that three patents covering Galderma Laboratories's Oracea® drug product for the treatment of acne rosacea were not invalid as obvious in view of the cited art. Specifically, the Board concluded that the petitioner, Amneal Pharmaceuticals, LLC, had failed to show that the cited secondary reference disclosed the claim limitations. In the second set of decisions, the PTAB denied the institution of three IPR's for patents that cover Gilead Sciences, Inc.'s Viread® drug product for the treatment of HIV-1. A fourth IPR was also filed at the same time, but a decision on institution is forth-coming. In this post, we will review the Galderma FWDs, and the circumstances surrounding them. We will follow-up at a future date with a review of the decisions not to institute in the Gilead cases.

The active ingredient in Oracea® is doxycycline, an antibiotic tetracycline compound. The oral administration of the drug is done at sub-antibacterial dosages, which was found to be effective in treating acne rosacea without the known undesirable side effects accompanying antibacterial dosages. During development of the drug, scientists at Shire Laboratories Inc. developed a formulation using two different release profiles, an immediate release ("IR") and a delayed release ("DR"), which facilitated a once-daily dosing regimen. This formulation was first described and claimed in U.S. Patent No. 7,749,532 ("the '532 patent"), which had related continuations U.S. Patent Nos. 8,206,740 ("the '740 patent"), 8,394,405 ("the '405 patent"), and 8,394,406 ("the '406 patent"). These last three patents were the subject of the three IPRs at issue, IPR2013-00368, IPR2013-00371, and IPR2013-00372, respectively, (filed in June, 2013). The IPRs were entitled Amneal Pharmaceuticals, LLC v. Supernus Pharmaceuticals Inc. – Shire was the predecessor to Supernus. Representative claims of these three patents include:

1. An oral pharmaceutical composition of doxycycline, which at a once-daily dosage will give steady state blood levels of doxycycline of a minimum of 0.1 µg/ml and a maximum of 1.0 µg/ml, the composition consisting of (i) an immediate release (IR) portion comprising 30 mg doxycycline; (ii) a delayed release (DR) portion comprising 10 mg doxycycline; and optionally, (iii) one or more pharmaceutically acceptable excipients.

'740 Patent, claim 1;

1. An oral pharmaceutical composition comprising about 40 mg of total doxycycline, which at a once-daily dosage will give steady state blood levels of doxycycline of a minimum of 0.1 µg/ml and a maximum of 1.0 µg/ml, wherein the composition consists of 70 to 80 percent of the doxycycline formulated as an immediate release (IR) formulation and 20 to 30 percent of the doxycycline formulated as a delayed release (DR) formulation.

'405 Patent, claim 1; and

1. An oral pharmaceutical composition comprising less than 50 mg of total doxycycline, which at a once-daily dosage will give steady state blood levels of the doxycycline between 0.1 µg/ml and 1.0 µg/ml, and a Cmax of the doxycycline between 0.4 µg/ml and 0.8 µg/ml, the composition consisting of (i) an immediate release (IR) formulation of the doxycycline, (ii) a delayed release (DR) formulation of the doxycycline comprising at least one enteric polymer, and (iii) one or more pharmaceutically acceptable excipients, wherein the doxycycline in the IR and DR formulations is in a ratio of 75:25.

'406 Patent, claim 1.

Interestingly, the '532 patent was involved in a Hatch-Waxman-type litigation in the U.S. District Court for the District of Delaware. We reported at the time on the Federal Circuit appeal of the outcome of that case (see "Research Foundation of State University of New York v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2013)"). The Delaware District Court had held that the '532 patent (the patent not subject to an IPR) was not invalid as obvious, and the appeals court affirmed. In addition to the Research Foundation of State University of New York v. Mylan Pharmaceuticals Inc. case, there have been several litigations involving the Orange Book patent covering Oracea®, including Galderma Labs. v. Amneal Pharms. in the Delaware District Court. Only the '740 patent was in common between the IPRs and the Amneal case.

The three IPRS were virtually identical, so this post will focus on IPR2013-00368 as representative. The Board first construed the claim term "delayed release." Oddly, even though neither party proposed a construction for this term, the Board appeared to request one during oral argument. Everyone was in agreement that the term means "release of a drug at a time other than immediately following oral administration." However, there was disagreement whether the broadest reasonable construction required that there be no substantial release in the stomach. Supernus argued that the patent described this term as allowing "no substantial release of doxycycline in the acidic stomach environment of approximately below pH 4.5." Amneal, on the other hand, argued that this construction was too narrow, and that the delay should only include drug release after a time lag, irrespective of whether there is release in the stomach. The Board agreed with Amneal and chose not to read the limitation form an embodiment into the claim term.

All three IPRs were instituted with only one ground of rejection, that the claims at issue were obvious in view of Ashley '932 (WO 02/080932 AI), which incorporated by reference provisional application No. 60/281,854, and Sheth (U.S. Patent No. 5,348,748). According to the FWDs, "Ashley '932 discloses administering a tetracycline compound, e.g., doxycxline or minocycline, in sub-antibacterial doses to treat acne, including acne rosacea." The provisional application disclosed controlled release of the drug product in order to reach a sub-antibacterial serum level of 0.4 to 0.8 µg/ml. This reference was, however, missing the once daily dosage utilizing an IR and DR formulation, and it ratio. Amneal argued that Sheth provided the additional limitations, and that one of skill in the art would have combined the two references together. The FWD describes Sheth as disclosing "a once-daily formation of minocycline that provides an antibacterial total daily dose." This is accomplished using quick-release pellets and a secondary loading component of slow-release pellets. The issue came down to whether these slow-release pellets provided "delayed release." The Patent Owner took the position that the secondary loading portions were not delayed because they begin release "in the stomach promptly after administration." The petitioner, on the other hand, argued that there was a "lag" before release. In fact, they cited testimony of Supernus's expert, who said: "Again, you're over simplifying the question. I think there would be some lag between when the polymer hydrated and the drug diffused through, but you wouldn't consider that a delay." The Board agreed that Sheth did not describe a "delayed release," noting that the lag time to wet the material would not be considered a "delay." The Board also indicated that Amneal had failed to explain how there would be an appreciable delay "once water in the patient's saliva or gastric fluid has begun to solubilize the pH-insensitive polymer in the coating." Finally, the Board concluded that petitioner's "argument that Sheth discloses the claimed IR:DR ratio (or makes the claimed ratio reachable through routine experimentation) thus becomes untenable." Without this evidence, the challenge failed.

It goes without saying that it will be interesting to see how the other Orange-Book-listed patents fare in the other IPRs that are currently ongoing. It will also be informative to find out if patents (or related patents) that have also been unsuccessfully challenged in district court will be more likely to be upheld by the PTAB. Patent-owning practitioners often contemplate whether the filing of a Patent Owner Response is the best course of action. It can essentially "tip you hand" as to your arguments, providing the petitioner with an additional opportunity to respond. However, it is also considered advisable to prevent institution in the first place, which may only be possible in some cases with the filing of a response. In this case, Supernus did file such a response. Nevertheless, as explained above, even though the IPR was instituted, the Board did not follow-through, but instead found the patent to not be invalid. On the other hand, we will explore in a future post the Gilead case, in which institution of an IPR for pharmaceutical patent was successfully defended against.

October 14, 2014

On Wednesday, the Supreme Court will hear oral arguments in the Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. case to determine whether appellate courts should afford any deference to a trial court's claim construction determination. We have been previewing this case, including the case law backdrop (see "Supreme Court Preview -- Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. -- The End of Cybor Corp.?") and the positions of the parties as presented in their briefing to the Court (see "Teva v. Sandoz -- Supreme Court Preview"). And, for a more detailed explanation of the science underlying the case, we provided a summary of the Federal Circuit decision at the time (see "Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. (Fed. Cir. 2013)"). Of course, unlike the Lighting Ballast en banc case, very little was said at the Federal Circuit regarding the standard of claim construction review in the appellate court's decision. In fact, even though the Court explicitly noted that it was using the de novo standard, it was framed as a determination of indefiniteness. Teva Pharmaceuticals USA, Inc. v. Sandoz Inc., 723 F.3d 1363, 1369 (Fed. Cir. 2013) ("On de novo review of the district court's indefiniteness holding, we conclude that Dr. Grant's testimony does not save Group I claims from indefiniteness.").

The outcome of this case will certainly impact patent litigants going forward. However, what policy concerns does this case represent to operating companies in the abstract? Interestingly, of the three amicus briefs submitted by operating companies themselves (representing 20 companies in total), all supported maintaining the de novo standard of review. One of these briefs, filed by Fresenius Kabi USA, LLC, argued that adoption of deferential review would disproportionately impact medical technology patents, considering that 35 U.S.C. § 112 issues arise more often in such patents. This problem, according to Fresenius, is caused by the interplay between the canon of construction to preserve validity and the invalidity issues related to § 112, and will necessitate related factual findings for these medical technology patents.

The remaining 19 amici were self-described as "high-technology" or "technology" companies. Both sets pointed out why the Supreme Court's Markman decision actually favored de novo review. They both also outlined several public policy concerns raised by the possibility of a more deferential standard. And, one of these policy concerns raised by both briefs was that a change to a more deferential standard would serve to benefit the companies that have been labeled as "patent trolls" -- non-practicing entities ("NPEs") and patent assertion entities ("PAEs").

Intel, EMC, Facebook, Red Hat, and Verizon

Intel, et al. ("Intel") alleged that NPEs will be more likely to forum shop if a more deferential standard of claim construction is adopted. In general, Intel believed that forum shopping will likely increase because parties will be secure in the knowledge that the selected jurisdiction's decisions will likely be upheld upon review. These five companies pointed out that they have all had personal experience with the significant costs of NPE litigation tactics. They cited a piece authored by Judge Moore before becoming a Federal Circuit judge, which pointed out that forum shopping erodes public confidence, wastes resources, and decreases innovation. The Federal Circuit was created to remedy the problem of forum shopping, and Intel suggested this will be eroded with a deferential standard of claim construction review.

With regard to other public policy considerations, Intel argued that de novo review was preferable to a more deferential standard because it ensures consistent, accurate constructions of claim language. The alternative will instead result in the possibility of contradictory interpretations of the same patent claims in different cases. In fact, the Supreme Court in Markman noted that because the Federal Circuit was the only court hearing patent appeals, it would ensure the uniformity and certainty of claim constructions. This is because any final decisions would apply to future cases as a matter of stare decisis. And, as Intel pointed out, application of stare decisis cannot occur if the appellate court is required to follow deferential review.

Intel also pointed out that the threat of inconsistent rulings is not imaginary. In the case of the American Piledriving, seven different courts construed three terms from the same patent, and no two courts construed all three terms the same. This possibility is likely to increase because of the provisions of the America Invents Act requiring plaintiffs to pursue separate litigations against individual defendants. In response to the argument that res judicata eliminates any concern about deferential review, Intel pointed out that issue preclusion would not apply to new and independent litigants. In fact, an alleged infringer would only need to offer evidence supporting a different construction to be allowed a chance to litigate a different construction.

More importantly, according to Intel, deferential review of claim constructions would likely increase the cost of patent litigation. A deferential standard would prevent expeditious resolution in district court. Unlike the current practice in many jurisdictions of holding early claim construction hearings, courts are likely to require intensive discovery before entertaining such motions. It will, therefore, be harder to obtain early summary judgment, dismissal, or other resolution. Moreover, delaying claim construction until the end of a case, which is likely to happen with deferential review, will force the parties to litigate for years without the benefit of knowing how the claims will be interpreted. This will also have the effect of reducing incentives to settle early.

Google et al. ("Google") focused on the serious problems caused by vague patent claims, unpredictable constructions, and costly litigation. In fact, according to Google, the cost of litigations involving overbroad and vague claims, such as used by PAEs, would only increase under deferential review of claim construction. Google also pointed out that classifying claim construction as partly factual would encourage lower courts to defer claim construction. This would virtually eliminate early dispositive motions and/or early informed settlement discussions. The uncertainty caused by delayed construction "plays into the hands of" PAEs. Reiterating that claim construction is a question of law would, according to Google, save millions of dollars in litigation costs, and would deter nuisance suits. Of course, this begs the question whether such nuisance suits are deterred now.

Google was also not convinced that decreasing the number of reversals on appeal was a good idea. In any event, the reversal rates might be overstated because of selection bias (only the hardest cases are appealed), and studies have shown that the reversal rate has actually been decreasing in the past decade. Of course, a lower reversal rate is not preferable if it results in maintaining a wrong construction.

Part of the problem, according to Google, is the Federal Circuit's seemingly contradictory canons of claim construction. For example, it is axiomatic that courts interpret claims in light of the specification, but it is also black letter that courts must not import limitations from the specification into the claims. It is this inconsistent claim construction methodology, along with vaguely drafted claims, that are the "root causes of the uncertainty plaguing this area." Deference is not the answer, according to Google, and will likely make problems worse.

It will be interesting to see if any of the Justices will focus on the impact claim construction review will have on patent troll litigation. With any luck, we will have a better idea of the position the Court is likely to adopt based on the questioning at the hearing. Of course, we will review the transcript and will provide a summary shortly after the hearing on Wednesday.

Rule 52(a) of the Federal Rules of Civil Procedure provides that in matters tried to district court, the court's "[f]indings of fact . . . must not be set aside unless clearly erroneous."

The question presented is as follows:

Whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.

The phrasing of the question appears to suggest the answer. Nevertheless, instead of arguing whether Rule 52(a) applies to findings of fact in claim construction hearings, the parties instead disagreed as to whether claim construction even involves factual issues that would implicate Rule 52(a). We have recently outlined the procedural background of this case, as well as reviewed the prior Supreme Court and Federal Circuit case law relevant to this issue (see "Supreme Court Preview -- Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. -- The End of Cybor Corp.?"). This post will preview the position of the parties, as detailed in their briefings to the Court.

Teva's Brief

Teva, not surprising, portrays claim construction as an endeavor that requires a great amount of fact finding. "A court often cannot interpret a patent without first understanding what skilled people in the relevant art knew, and what words they used, when the patent application was filed." Teva's Brief at 15. As such, Teva argued, the Federal Circuit was incorrect to hold "that every aspect of claim construction, even 'allegedly fact-based questions' [are] reviewed de novo." Id. at 18 (citing Cybor Corp). In other words, "[t]he Federal Circuit cannot dodge [Rule 52(a)] by calling a factual question a legal one." Id.

In making this argument, Teva explained that patents are written for the intended audience of "persons skilled in the art." As such, they must be interpreted from that perspective. Therefore, Teva explained, Courts are required to consult evidence to determine if there is some specialized meaning in the art. Courts also must look to extrinsic evidence, especially "when the relevant term does not have a single, well-established meaning." Id. at 28. Teva also pointed out that expert testimony is often used to elucidate the prosecution history. Finally, as was the case here, when the validity of the patent is challenged under 35 U.S.C. § 112 ¶ 2, "the dominant inquiry will be a factual one turning on a skilled artisan's knowledge." Id. at 29.

The Federal Circuit's appellate review rules for claim construction as compared to other patent validity issues can result in the same evidence being reviewed under two different standards, Teva alleged. For example, for an obviousness inquiry, the "scope and content" of the prior art is a factual determination. Nevertheless, if the same prior art is reviewed in the claim construction context, it is treated as a legal matter. This is also true for the level of ordinary skill in the art. Teva pointed out that other validity issues are also reviewed deferentially, such as whether a specification enables a skilled artisan to practice an invention. This same review of the intrinsic evidence is reviewed de novo during claim construction.

Teva explained why the rationales provided by the Federal Circuit in Cybor Corp, and to a lesser extent Lighting Ballest, are unpersuasive. First, the conclusion in Cybor Corp did not flow directly from the Supreme Court's Markman decision, Teva argued. Markman allegedly only resolved who should be performing claim construction, the courts. However, in so doing, it referenced the factual nature of claim construction several times, whether as a "mongrel practice," a "mixed question of fact and law," or a determination with "evidentiary underpinnings." The excuse that patents are written instruments, and therefore their interpretation is not entitled to deference, was equally unpersuasive to Teva. Finally, Teva pointed out that facts cannot be turned into law for the mere sake of uniformity.

Instead, the brief continued, when the appellate court resorts to its own fact finding, the cost to the patent system is great. District court judges often provide little to no reasoning for their claim construction determinations, because with de novo review, the Federal Circuit is likely to ignore it anyway. Appellate courts also do not have the time for a deep review of the science and technology involved, the argument continued. More importantly, with de novo review, the parties are encouraged to keep litigating, because any adverse decision for claim construction could possibly be ultimately overturned. Teva was also not persuaded by the proclamation by some Federal Circuit judges of informal deference. Teva concluded by pointing out that if the Court adopted the "correct" standard, this present case would have come out differently -- it would have won.

Sandoz's Brief

Perhaps in response to the wording of the question presented, Sandoz took the position that Rule 52 does not apply to claim construction, which is a "purely legal" question. Citing Miller v. Fenton, 474 U.S. 104 (1985), Sandoz explained that the "law/fact inquiry turns on whether a judicial actor reviewing the legal standards and the record is more likely to arrive at the correct conclusion, or whether the initial factfinder is better positioned to do so because the credibility of witnesses is pivotal to the issue at hand." Sandoz Brief at 17. Because claim construction turns on the claims, specification, and prosecution history, and not the credibility of witnesses, Sandoz continued, any facts that are encountered are merely "legislative facts," and therefore no deference is owed.

Sandoz explained why de novo review followed directly from Markman. First, the question presented in that case was "whether claim construction 'is a matter of law reserved entirely for the court, or subject to a Seventh Amendment guarantee . . . .'" Id. at 19 (citing Markman). Sandoz did not explain, however, why this legal determination could not be based on underlying factual underpinnings. Nevertheless, Sandoz argued that the Supreme Court's observations regard the "evidentiary underpinnings" of claim construction actually bolsters the application of de novo review, because that Court concluded that the question is "purely legal".

The question of uniformity was also addressed. First, Sandoz explained that uniformity was not a "free-standing principle." Rather, because patents are federally granted rights, the claim terms should only have one meaning. Sandoz also responded to argument that issue preclusion could accomplish the same goals of uniformity. It explained that issue preclusion could not be applied against new alleged infringers. Instead, by applying stare decisis, the legal precedent of a claim construction decision could not be relitigated, which would promote the "public-notice function of patent claims." Id. at 40.

Finally, Sandoz argued that even if the Supreme Court concludes that some deference is required, the outcome of this case would be the same. It pointed out that Teva did not dispute that the claims are ambiguous on their face. It was also undisputed that "average molecular weight" has no ordinary and customary meaning, and that it is critical to know which measure is intended. Importantly, according to Sandoz, the Federal Circuit did not overturn any facts in finding that the claims were indefinite. Instead, that court determined as a matter of law that statements in the prosecution history were irreconcilable, which resulted in claims that were ambiguous. Thus, the outcome will be the same according to Sandoz, regardless of which standard this Court articulates.

We will continue our review of this case next week by highlighting some of the positions found in the amicus briefs. And, of course, we will provide an update of the oral hearing after the morning of October 15, depending of course on when the transcript is posted to the Supreme Court's web page.

September 29, 2014

The Supreme Court will begin its 2014-2015 term next Monday. Last year, the Court heard a record number of patent law cases, at least for recent history. Nevertheless, it is scheduled to hear another one on October 15. Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. will address whether appellate courts should afford any deference to a trial court's claim construction determination. This issue stems from the holding of the Supreme Court's 1996 Markman decision, although the Court did not address the standard of review in that decision. And even though the Teva case is familiar to readers of this weblog, as it arose under the Hatch-Waxman statute of 35 U.S.C. § 271(e), any pronouncement by the Supreme Court will certainly have implications for nearly all patent cases. This post will preview the upcoming argument by providing an overview of the Teva decision and the cases leading up to it.

Teva at the District Court and the Federal Circuit

The Teva case arose from Sandoz's ANDA application to market and sell Teva's multiple sclerosis drug Copaxone®. However, unlike small molecule drug products, the active ingredient of Copaxone® is copolymer-1 (or glatiramer acetate) -- a mixture of polypeptides molecules. Specifically, the copolymer-1 polypeptides contain four different amino acids (alanine, glutamic acid, lysine, and tyrosine), but vary in their arrangement and number. Because the composition is not uniform, it is often expressed in terms of "average molecular weight." The District Court was therefore required to construe the term "molecular weight."

Statistically speaking, there are at least three ways to calculate average molecular weight: peak average molecular weight (Mp), number average molecular weight (Mn), and weight average molecular weight (Mw). These three values can be determined from the common method for measuring "molecular weight" -- Size Exclusion Chromatography ("SEC"). A simplistic way to think about SEC is as a technique that utilizes a column "sieve" that allows different size (or weight) molecules to leave (elute) the column at different times. After the column is calibrated, the size or weight of the molecules in question can be determined depending on when they elute from the column. The patents at issue contained an ambiguity with regard to which of the average molecular weight calculation was intended. The District Court listened to the testimony of Teva's expert, Dr. Grant, and reviewed the specification and prosecution history, and based on that evidence, construed the term as "peak average molecular weight (Mp)." Mp is the molecular weight of the most abundant molecule in the sample, which occurs as the highest peak in an elution profile. Correspondingly, because the Court found that the term was not insolubly ambiguous, it held that the claims containing the term were not invalid as indefinite.

The Federal Circuit did not agree. Specifically noting the standard of review, the Court held that "[o]n de novo review of the district court's indefiniteness holding, we conclude that Dr. Grant's testimony does not save [a particular subset of claims] from indefiniteness." Teva Pharmaceuticals USA, Inc. v. Sandoz Inc., 723 F.3d 1363, 1369 (Fed. Cir. 2013). Instead, the appellate court appeared to give more credibility to the testimony of Appellants' experts. Moreover, the Federal Circuit also reviewed the specification and prosecution history and found them not to be as clear as did the District Court. The Federal Circuit, however, gave no indication whether the outcome would have been different under a different standard of appellate review.

The Question Presented at the Supreme Court

The sole issue on appeal to the Supreme Court was encapsulated by the question presented:

Rule 52(a) of the Federal Rules of Civil Procedure provides that in matters tried to district court, the court's "[f]indings of fact ... must not be set aside unless clearly erroneous."

The question presented is as follows:

Whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.

One wonders if the phrasing of the question presumes the answer. The grant of certiorari came on the heels of the Federal Circuit's en banc decision in Lighting Ballast Control LLC. v. Philips Electronics N.A. Corp. on February 21, 2014. That case reconsidered, and affirmed, the holding in Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), which itself established the standard of appellate review for claim construction decisions after the Supreme Court's Markman II decision. Therefore, to truly appreciate the issues in Teva, it is necessary to understand these cases as well.

Markman v. Westview Instruments (Markman II)

The Supreme Court, in its seminal case Markman II, held "that the construction of a patent, including terms of art within its claim, is exclusively within the province of the court." Markman v. Westview Instruments, Inc., 517 U.S. 370, 372 (1996). In so doing, it affirmed the Federal Circuit's determination that claim construction is an issue for the judge, not the jury, but was silent with regard to that court's determination that it should review a district court's construction de novo on appeal.

To resolve who has responsibility for construing claim terms, the Supreme Court analyzed Seventh Amendment jurisprudence to determine if it was proper to remove claim construction from the province of the jury. In so doing, it repeatedly noted the factual components involved. See, e.g., id. at 378 ("But the sounder course, when available, is to classify a mongrel practice (like construing a term of art following receipt of evidence) by using the historical method . . . ."); id. at 388 ("when an issue 'falls somewhere between a pristine legal standard and a simple historical fact, the fact/law distinction at times has turned on a determination that . . . one judicial actor is better positioned than another to decide the issue in question.'" (citingMiller v. Fenton, 474 U.S. 104 (1985)). Nevertheless, the Court found "sufficient reason to treat construction of terms of art like many other responsibilities that we cede to a judge in the normal course of trial, notwithstanding its evidentiary underpinnings." Id. at 390. The public policy of uniformity was an important consideration for the Court, because "treating interpretive issues as purely legal will promote (though it will not guarantee) interjurisdictional certainty through the application of stare decisis on those questions not yet subject to interjurisdictional uniformity under the authority of the single appeals court." Id. at 391.

Cybor Corporation v. FAS Technologies, Inc.

After the Supreme Court's pronouncement in Markman II, the Federal Circuit inconsistently applied different standards of appellate review for claim construction determinations. Therefore, the Court sua sponte ordered that the issue be decided en banc in the case that issued as Cybor Corporation v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998). The majority concluded that the proper standard is de novo review, "including any allegedly fact-based questions relating to claim construction." Id. at 1456. The Court relied heavily on the fact that the Supreme Court affirmed Markman I, which itself used the de novo standard of review.

Curiously, the outcome in the Cybor case was not affected by the standard of review -- even under de novo review, the majority affirmed the lower court's claim construction determination. As such, the judges not joining the opinion filed concurrences-in-judgment, but a vocal minority expressed their disagreement with the articulated appellate review standard. Then-Chief Judge Mayer stressed that the Supreme Court stopped short of requiring de novo review of evidentiary disputes where the lower court did not commit clear error. Judge Rader pointed to the district court judges as being in a better position to make these evidentiary determinations. Finally, Judge Newman noted that the Supreme Court's goal of promoting stability in the application of patent law had already been diminished by the Federal Circuit's use of the de novo standard. She pointed to three areas that have disappointed expectations: (1) the Federal Circuit's refusal to accept certified questions related to claim construction, (2) the Court's creative claim interpretations in some cases, and (3) the failure of the Court to be bound by stare decisis with regard to the same claims. This last point was exemplified by the CVI/Beta Ventures, Inc. v. Tura LP, 112 F. 3d 1146 (Fed. Cir. 1997) case, in which the Court concluded that a lower court erred in claim construction, even though it relied on "the Federal Circuit's claim interpretation in a separate infringement action involving the same patent." Cybor, 138 F.3d at 1477 (Rader, J., dissenting in part, joining in part, and concurring in the judgment).

Lighting Ballast Control LLC v. Philips Electronics N.A. Corp.

Because of the continued criticisms of the Cybor decision, the Federal Circuit recently took up the issue of what standard of review was appropriate for claim construction determinations. The majority in the Lighting Ballasten banc case, this time authored by Judge Newman, applied the principals of stare decisis in affirming the standard articulated in Cybor. Otherwise, the majority opinion included very little analysis supporting the Cybor decision itself. Instead, the Court found that the reasons asserted for departing from fifteen years of the de novo review were not compelling.

The two other possible standards expressed by Lighting Ballast and amici curiae were that either the entire claim construction determination should be reviewed for clear error, or that review should be a hybrid of de novo and deferential review. With regard to the former, Lighting Ballast had argued that the Supreme Court's Markman decision was only concerned with whether claim construction could be heard by a jury or whether it was solely within the purview of the judge. In so doing, it made no pronouncement related to the standard of review. Because construing patent claims often involves expert testimony and documentary evidence, Lighting Ballast asserted that the deferential standard of clear error should apply. In contrast, several amici curiae advocated a hybrid approach, including most notably the United States. This approach would maintain the ultimate determination of claim construction as a "purely legal" matter, but would acknowledge that there are factual aspects to any determination.

A vigorous dissent was filed by Judge O'Malley, joined by three other judges including then-Chief Judge Rader. This dissent stressed the requirements of Federal Rule of Civil Procedure 52(a)(6), which requires that all "findings of fact . . . must not be set aside unless clearly erroneous." The dissent pointed repeatedly to Supreme Court's analysis in Markman II, in which it highlighted the factual nature of claim construction determinations. In criticizing the Lighting Ballast holding, the dissent pointed out that stare decisis is not an inexorable command. Rather, case law can be abrogated in at least three circumstances, when it was originally wrongly decided, when it is at odds with congressional directives, and when it have negative consequences. Not surprising, the dissent found all three to be present with regard to this issue. In support of the proposition that Cybor has resulted in negative consequences, the dissent pointed to the high reversal rate with respect to claim interpretation by district courts, coupled with the fact that entire trials are held premised on these constructions.

The Look Ahead

There remain some important questions to consider. First, in view of the fact that the Federal Circuit has been applying the de novo standard of review to claim construction determinations for over fifteen years, should the Supreme Court give any weight to the patent community's many years of experience with this standard? In fact, a close reading of Lighting Ballast suggests that the outcome might have been different if the Federal Circuit were considering the issue as one of first impression. And, of course, the Supreme Court is not limited by the same concerns of stare decisis. Another question involves the Supreme Court's articulated goal in Markman (II) of "interjurisdictional uniformity." Should the Supreme Court overlook the factual nature of claim construction determinations in order to further this goal? Increasingly, the same patent is being asserted against multiple defendants, often in different jurisdictions. If required to adopt a more deferential standard of appellate review, the Federal Circuit will likely be forced to affirm conflicting constructions of the same claim terms from the same patents. This, in turn, could lead to heightened forum shopping by patent owners. Finally, the Supreme Court's articulated "Question Presented" in the Teva appeal would appear to suggest that it will apply Rule 52(a) to the factual findings in support of the construction of patent claim terms. Should the Supreme Court adopt such a hybrid approach, and if so, what criteria should be used to differentiate issues of fact from issues of law?

Ten amicus briefs were filed in the Teva case. Only three of these represented the opinions of operating companies, but there were 20 companies represented: (1) Intel, EMC, Facebook, Red Hat, and Verizon; (2) Google, Dell, Hewlett-Packard, Salesforce.com, Twitter, Yahoo!, Acushnet, Ebay, Kaspersky Lab, Limelight Networks, Newegg, QVC, SAS, and Xilinx; and (3) Fresenius Kabi USA. Interestingly, each of these briefs advocated for maintaining the de novo standard. The United States also submitted a brief, and advocated for this hybrid deferential/de novo standard of review. We will provide some of the highlights of all of the briefing, including these amicus briefs, in the upcoming weeks.

September 15, 2014

On September 2nd, the Patent Trial and Appeals Board (PTAB) entered judgment in an inter partes review styled Ariosa Diagnostics v. Isis Innovation Ltd. (IPR 2012-00022). The Board found that Ariosa demonstrated, by a preponderance of the evidence of record, that claims 1, 2, 4, 5, 8, 19, 20, 24, and 25 of U.S. Patent No. 6,258,540 are unpatentable under 35 U.S.C. § 102(b). But the Board found that Ariosa did not carry its burden of showing by a preponderance of the evidence that claims 3, 12, 13, 15, 18, 21, and 22 of the '540 patent were unpatentable under 35 US.C. § 103(a).

The claims under inter partes review are as follows:

1. A method for detecting a paternally inherited nucleic acid of fetal origin performed on a maternal serum or plasma sample from a pregnant female, which method comprises amplifying a paternally inherited nucleic acid from the serum or plasma sample and detecting the presence of a paternally inherited nucleic acid of fetal origin in the sample.

2. The method according to claim 1, wherein the foetal nucleic acid is amplified by the polymerase chain reaction.

3. The method according to claim 2, wherein at least one foetal sequence specific oligonucleotide primer is used in the amplification.

4. The method according to claim 1, wherein the foetal nucleic acid is detected by means of a sequence specific probe.

5. The method according to claim 1, wherein the presence of a foetal nucleic acid sequence from the Y chromosome is detected.

8. The method according to claim 1, wherein the presence of a foetal nucleic acid from a paternally-inherited non-Y chromosome is detected.

12. The method according to claim 5, for determining the sex of the foetus.

13. The method according to claim 5, which comprises determining the concentration of the foetal nucleic acid sequence in the maternal serum or plasma.

15. The method according to claim 13, for the detection of a maternal or foetal condition in which the level of foetal DNA in the maternal serum or plasma is higher or lower than normal.

18. The method according to claim 13, for detection of a foetal chromosomal aneuploidy.

19. The method according to claim 1, wherein the sample contains foetal DNA at a fractional concentration of total DNA of at least about 0.14%, without subjecting it to a foetal DNA enrichment step.

20. The method according to claim 19, wherein the fractional concentration of foetal DNA is at least about 0.39%.

21. A method of performing a prenatal diagnosis, which method comprises the steps of: (i) providing a maternal blood sample; (ii) separating the sample into a cellular and a non-cellular fraction; (iii) detecting the presence of a nucleic acid of foetal origin in the non-cellular fraction according to the method of claim 1; (iv) providing a diagnosis based on the presence and/or quantity and/or sequence of the foetal nucleic acid.

22. The method according to claim 21, wherein the non-cellular fraction as used in step (iii) is a plasma fraction.

24. A method for detecting a paternally inherited nucleic acid on a maternal blood sample, which method comprises: removing all or substantially all nucleated and anucleated cell populations from the blood sample, amplifying a paternally inherited nucleic acid from the remaining fluid and subjecting the amplified nucleic acid to a test for the Paternally inherited fetal nucleic acid.

25. A method for performing a prenatal diagnosis on a maternal blood sample, which method comprises obtaining a non-cellular fraction of the blood sample amplifying a paternally inherited nucleic acid from the non-cellular fraction and performing nucleic acid analysis on the amplified nucleic acid to detect paternally inherited fetal nucleic acid.

(Italics indicating claims found unpatentable by the PTAB.)

The decision provided the following synopsis of the asserted grounds of unpatentability:

The decision noted that Ariosa abandoned at oral argument its first two grounds of unpatentability set forth above.

Arriving at its bases for deciding the questions before it, the Board reiterated its decision (as set forth in its Decision on Petition) rejecting Isis's arguments that Ariosa lacked standing under § 315 to petition for inter partes review based on the litigation between the parties. Specifically, the Board addressed Isis's contention that "it 'is of no moment'" that Ariosa raised its validity challenge as an affirmative defense (in the face of Isis's infringement allegations prompted by Ariosa's declaratory judgment action for judgment of non-infringement). Isis also argued unsuccessfully that the exception under § 315(a)(3) does not apply because Isis (and its licensee, Sequenom) did not initiate the civil action. Finally, Isis argued (again unsuccessfully) that granting Ariosa's petition for inter partes review would "thwart the intent of Congress," inter alia, by permitting "patent owner harassment." For clarity, the Board set forth the precise question decided in granting Ariosa's petition:

[W]hether filing a Declaratory Judgment of non-infringement in District Court bars Ariosa from later filing a petition for Inter Partes Review under 35 U.S.C. § 315(a), and whether the express mention of a counterclaim of invalidity in 35 U.S.C. § 315(a)(3) mandates interpreting the statute such that raising an affirmative defense of invalidity in response to a compulsory counterclaim of infringement deprives Ariosa of standing to file for inter partes review.

The Board's decision to grant Ariosa's petition was based on its determination that the plain meaning of the statute, as interpreted by the definitions of "filing" and "a civil action" provided by the Federal Rules of Civil Procedure, is that the bar arises when a petitioner has filed a complaint prior to filing the inter partes review petition. The Board also distinguished between raising an affirmative defense and filing a counterclaim, based on its understanding of the differences defined by the Supreme Court in Altvater v. Freeman, 319 U.S. 359 (1943). In that case, the Court decided that a counterclaim is "justiciable" even in the face of a determination of non-infringement, while an affirmative defense of invalidity under similar circumstances would be to "decide a hypothetical case." Citing Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83 (1993), the Board decided that "it is clear []that there is a fundamental difference between an affirmative defense of invalidity and a counterclaim of invalidity," and thus that the declaratory judgment of non-infringement by Ariosa in this case did not fall within the activities the statute provides would bar the grant of the inter partes review petition.

The Board also rejected Isis's contention that § 315(b) barred grant of the petition because Isis had filed its infringement lawsuit more than a year before filing the inter partes review petition, because the infringement complaint had been dismissed without prejudice, citing the Board's prior decision to this effect in Macauto U.S.A. v. BOS GmbH & KG, Case IPR2012-00004 (PTAB January 24, 2013).

In the last of the procedural issues discussed in the decision, the Board rejected Isis's contention that granting Ariosa's Motion for Joinder (of two separate inter partes actions against different combinations of claims) was improper (despite the statutory language being limited to joinder of parties; § 315(c)) based on its practice in prior proceedings permitting such joinder, including Microsoft Corp. v. Proxycann, Inc., Case IPR2013-00109 (PTAB February 25, 2013), and Samsung Elecs. Co., Ltd. v. Virginia Innovation Scis., Inc., Case IPR2014-00557 (PTAB June 13,2014). The Board found no prohibition of issue joinder in either the statutory language or the legislative history, and relied on its rules (37 CFR § 42.1(b)) implementing § 316, specifying that "[t]he rules are to be construed so as to ensure the just, speedy, and inexpensive resolution of a proceeding."

Turning to the merits of Ariosa's invalidity contentions, the Board construed the claim term "detecting." In doing so, the Board made the following claim construction determination applying the "broadest reasonable interpretation" standard under 37 C.F.R. § 42.100(b):

"detecting" means that the amplified DNA was detected, but not that such DNA be identified as being of paternal or fetal origin.

This construction, according to the Board, is consistent with the construction used by Isis's expert at trial, and further that in the context of the claims Isis could have limited what was detected to paternal and fetal DNA by stating that "only" this DNA was detected (but, says the Board, "they chose not to do so," implying a decision point that there is no evidence Isis ever encountered). While the Board relies on claim construction canons (such as not reading limitations from the specification into the claims), it is incongruous that the Board rendered this construction decision (which is dispositive; see below) in interpreting the scope and meaning of claims specifically directed towards detecting paternal or fetal DNA in pregnant female blood.

With this construction established, the decision turned to the cited references. Regarding the Kazkov reference, asserted against claims 1, 2, 4, 5, 8, 19, 20, 24 and 25, the Board found that the practice of the methods disclosed in the reference inherently anticipated these claims, because amplification of DNA from maternal blood would necessarily detect "paternally inherited nucleic acid of fetal origin." Specifically, the Board found that the reference taught that: 1) extracellular DNA is present in human blood; 2) the amount of this DNA increases with pregnancy; 3) this DNA was detected using PCR; 4) the amplified DNA was detected (using gel electrophoresis); and 5) the primers Kazakov used would have detected paternal DNA (insofar as the primers amplified sequences present (albeit not exclusively) on the Y chromosome).

Under the Board's construction, "Kazakov discloses the same method of claim 1." The Board stated that "all that is required by the amplification step of claim 1 is a step of amplifying nucleic acid from a serum or plasma sample from a pregnant female, such as by PCR, as such amplified nucleic acid would necessarily include fetal nucleic acid, and the fetal nucleic acid necessarily includes paternally inherited nucleic acid," so long as "the detecting step does not require that the detected nucleic acid specifically be identified as being inherited from the father or even as being from the fetus, only that it be identified as containing some level of nucleic acid, which would include, necessarily, nucleic acid from the fetus that was inherited from the father." The Board further reasoned that:

[I]f the ordinary artisan were to follow the teachings of Kazakov, and perform PCR on the serum obtained from the blood obtained from a pregnant female, that blood would inherently contain paternally inherited fetal nucleic acid. That nucleic acid would be amplified and detected by the experiments of Kazakov as such a result is necessarily inherent. That is, the amplification and detection of paternally inherited fetal nucleic acid would be a new benefit of a known process.

The Board further "credited" the testimony of Ariosa's expert, that the methods disclosed in Kazakov were all "conventional," although there is no discussion on the significance of these findings to the Board's decision. And Isis's arguments that the possibility that fetal or paternal DNA would not be detected received no traction with the Board in refuting its inherent anticipation determination (which is not surprising, because the Board's error was in claim construction not the application of the facts to the incorrectly construed claims).

Having made this determination regarding claim 1, the Board did not find (and in some cases Isis did not provide) any basis for the same reasoning not to be applied to claims 2, 4, 5, 8, 19, 20, 24, and 25, and thus found these claims to also be inherently anticipated by the Kazakov reference.

Regarding obviousness, the Board held that Ariosa had not borne its burden of establishing invalidity by a preponderance of the evidence. Limiting its considerations to the combination of the Kazakov and Simpson references, the Board found that the Simpson reference taught detection of fetal cells, not fetal cell-derived DNA in maternal whole blood, and that the art taught that detecting fetal cells in maternal blood was "a rare occurrence." Under these circumstances, the Board found that:

[T]he ordinary artisan would not have used the serum sample of Kazakov, which is a cell-free sample, for the whole blood sample of Simpson, which contains the cellular fraction, for the analysis of fetal DNA as taught by Simpson. The ordinary artisan would not have had a reasonable expectation that the fetal DNA would have been present in maternal serum in sufficient quantities for detection using amplification methods such as PCR given the understanding in the art that fetal cells were a rare occurrence in maternal blood. Moreover, Kazakov's lack of teaching that the increase in extracellular DNA in the serum of pregnant females is due to the presence of cell-free fetal DNA in the serum further supports that conclusion.

Ironically, the Board's decision on obviousness relies on the failure of the art to recognize that fetal or paternal DNA could be detected in maternal blood, a distinction that the Board did not credit in its claim construction leading to its contrary decision regarding (inherent) anticipation by the Kazakov reference.

The Board also rejected Ariosa's obviousness contentions based in the combination of the Kazakov, Simpson, Schallhammer (earlier determined by the Board to be cumulative over the teachings of the Simpson reference) and Bianchi references (wherein Bianchi taught Y-chromosome specific primers), based on the same lack of expectation that fetal cells (or their DNA) would be expected by the skilled artisan to be present in maternal blood.

The Board also denied Isis's motion to amend its claims, once again rendering a decision that contradicts the rationale for construing claims according to the broadest reasonable interpretation of its terms (i.e., that when before the PTO the patentee can amend her claims). The proposed amended claims are as follows, and were proposed to overcome the Board's broad construction of the term "detected" in the patented claims:

28. A method for detecting a paternally inherited nucleic acid of fetal origin performed on a maternal serum or plasma sample from a pregnant female, which method comprises amplifying a paternally inherited nucleic acid from the serum or plasma sample, and detecting the presence of a paternally inherited nucleic acid of fetal origin in the sample by determining that the paternally inherited fetal nucleic acid contains a sequence not possessed by the pregnant female.

31. A method for detecting a paternally inherited nucleic acid of fetal origin performed on a maternal serum or plasma sample from a pregnant female, which method comprises amplifying a paternally inherited nucleic acid from the serum or plasma sample, [and] detecting the presence of a paternally inherited nucleic acid of fetal origin in the sample by determining that the paternally inherited nucleic acid of fetal origin contains a sequence not possessed by the pregnant female,anddetermining fetal sex, fetal chromosomal aneuploidy, fetal mutation, fetal RhD status, or fetal paternally-inherited DNA polymorphism.

In a Kafka-esque fashion, the Board denied the motion because the patentee is under a burden of showing she is "entitled" to the "relief" of amending claims, and the burden imposed is to establish that the claims are patentable under all sections of the Patent Act. Even though inter partes review is limited to the issues of anticipation and obviousness based on prior art, the Board permits a challenge on the patentability of amended claims on all the statutory sections. Here, citing the District Court's decision (and in the face of the pending Federal Circuit appeal), the Board determined that Isis had failed to carry its burden of showing that the proposed amended claims are patent-eligible under § 101.

PTAB recognized that claims 1, 2, 4, 5, 8, 19–22, 24, and 25 of the '540 patent were declared invalid in Ariosa Diagnostics v. Sequenom. With the exception of claim 21, this outcome suggests that Ariosa could have invalidated the claims in the district court under § 102(b) and done much less violence to the patent system in doing so. It also raises the possibility that Sequenom may move the Federal Circuit to vacate the District Court's judgment based on § 101 in view of the Office's determination that the claims are invalid under § 102(b).

The Board's decision provides Isis with another opportunity to appeal to the Federal Circuit, this time on the PTAB's decision invalidating these claims. Assuming that the Court reverses the District Court on the patent eligibility issue, the Board has provided for review by the Court with issues of claim construction as well as procedural questions decided by the Board in instituting the petition in the first place.

September 02, 2014

In a not particularly well-written opinion that breaks no new ground, the Federal Circuit considered a consolidated appeal of two patents directed to methods of promoting hair growth, including, in particular, eyelash hair growth using compounds and analogs that were previously known for their utility in treating glaucoma.

Allergan had asserted its 7,351,404 patent (the '404 patent) and Duke asserted its 7,388,029 patent (the '029 patent) after Apotex filed an ANDA for a generic version of Allergan's Latisse®, an ophthalmic solution comprising bimatoprost (a prostaglandin F-2-alpha ("PGF") analog) as the active ingredient. The District Court had held the asserted patents were not invalid and were infringed, but in an opinion issued June 10, 2014, a split panel vacated and reversed. The appeal included an issue of claim construction, the Court once again delving the depths of the meaning of the word "and," as well as issues of anticipation and obviousness.

The two patents claimed uses of PGF analogs for promoting hair growth, generally, and eyelashes, in particular. The work that led to Duke's '029 patent arose from research into the effects of a wide range of prostaglandins on mice. The inventors discovered that PGF analogs specific for the FP receptor promoted growth of longer and thicker hair, and they filed the application directed to a method of treating hair loss.

The subject matter of the '404 patent arose from clinical studies of the glaucoma drug Lumigan® (identical to Allergan's Latisse®). The inventors observed that glaucoma patients treated with Lumigan® spontaneously grew longer and thicker eyelash hair. They filed their patent application directed to treatment of eyelash hair loss through topical administration of the PGF analog bimatoprost.

Claim construction

The claim construction issue involved the meaning of the '029 patent's claims to methods of "treating hair loss." The parties agreed that the term was to be construed as expressly defined in the specification: "'Treating hair loss' includes arresting hair loss or reversing hair loss, or both, and promoting hair growth." Apotex contended that the use of the conjunction "and" in the definition of "treating hair loss" required both (a) arresting or reversing hair loss and (b) promoting hair growth, whereas Allergan contended that term required only (a) arresting or reversing hair loss or (b) promoting hair growth. Under Apotex's construction, its generic version of Latisse® would not infringe the claims because Latisse® lengthened, thickened, and darkened existing healthy hair (which they contended meant only promoting hair growth) but did not arrest or reverse hair loss.

By contrast, Allergan contended, and the District Court agreed, that by use of the word "includes" in the definition of "treating hair loss," the patentee plainly meant to encompass any one or more of preventing hair loss, arresting hair loss, and promoting hair growth but not necessarily all simultaneously. This interpretation was further bolstered by examples in the specification demonstrating several aspects of hair growth promotion without accompanying arresting or preventing hair loss. The panel affirmed the District Court's decision.

The '029 patent claims expressly disclaimed the Johnstone compounds, but Apotex asserted that Johnstone anticipated nevertheless because Johnstone stated that α-chain could be unsaturated (as shown above) or saturated (i.e., wherein the double bond shown above is a single bond). So, Apotex argued that because the '029 patent claims also encompassed the use of PGF analogs in which the α-chain was saturated (the saturated compounds not having been disclaimed), Johnstone anticipated.

But the District Court agreed with Duke that Johnstone was insufficiently specific with respect to PGF analogs with saturated α-chains. The District Court held that in view of the state of the art, the ordinary artisan would not have read Johnstone as disclosing the single-bonded structures because the evidence showed that such structures would not have been thought to have a therapeutic effect because they would selectively bind the FP receptor. The District Court further noted the examiner's statement that Johnstone "lacks motivation to modify the prostaglandins taught therein in order to obtain the presently claimed prostaglandins."

Another argument (that wasn't made) might have been that Johnstone failed to expressly teach any particular compound that anticipated the asserted claims but, instead, taught a genus of compounds in which the members of the genus were not so few that the ordinary artisan could have immediately envisioned them. Indeed, the dissent, which agreed with the majority on this issue, noted that Jonstone's teachings amounted to a laundry list comprising thousands or even millions of variations.

Following its reasoning, the Federal Circuit panel held that the District Court's reasoning was not clearly erroneous.

(2) The '819 patent

The '819 patent (an Allergan patent) taught a method of treating glaucoma comprising administering selective PGF analogs (including bimatoprost). Although the '819 patent was silent with respect to any sort of hair growth, hair loss, or topical administration, the issue was whether the '819 patent nevertheless anticipated the claims as inherently teaching the treatment of hair loss.

To cut to the chase, the District Court held that the evidence demonstrated that although it was possible that administration of eye drops according to the '819 patent could have resulted in transfer of some liquid to the adjacent eyelid skin, such transfer would not necessarily occur. Therefore, because an inherent limitation must necessarily be present to anticipate, the '819 did not anticipate the '029 claims.

Obviousness

The District Court held that the '029 claims were not invalid as obvious over the combination of Johnstone and the '819 patent because, the Court reasoned, the ordinary artisan wouldn't have combined the teachings of the two. Although the compounds of the two patents shared the unsaturated α-chain and the were effective in treating glaucoma, the compounds of the '819 patent comprised terminal amide groups on the α-chain (e.g., bimatoprost, which has a terminal ethyl amide moiety) whereas Johnstone's compounds comprised an ester or carboxylic acid at that position. And, furthermore, the '819 compounds were thought to bind to a receptor other than the FP receptor.

The majority disagreed, noting that the '029 patent claims were not limited to compounds having an α-chain amide moiety but included compounds having a variety of moieties at the terminal position of the α-chain, including esters and carboxylic acids. The majority found this problematic because for patentability purposes inventors had relied on the fact that the amide-containing PGF analogs bind to a variant of the FP receptor. But ester- and carboxylic acid-containing PGF analogs within the scope of the claims do not, and the majority faulted the District Court for not considering the issue of obviousness with respect to the full scope of the claims. Similarly, the majority faulted the District Court for not considering the secondary indicia of obviousness (unexpected results) for the full scope of the claims.

And the majority further criticized the District Court for overlooking teachings in Johnstone, which was "replete" with references to the advantages of PGF compounds (including those with carboxylic acid and ester moieties) failing within the scope of the '029 patent claims, including specific guidance as to the parameters that would lead to a reasonable expectation of success.

The majority concluded that Johnstone provided adequate teachings in conjunction with the '819 patent to guide the ordinary artisan to the claimed methods with a reasonable expectation of success. Therefore, the District Court's finding that the '029 patent claims were non-obvious was vacated and reversed.

The '404 patent

One issue that arose with respect to the '404 was the date of invention, important for determining whether certain Brandt publications were prior art. In brief, the Federal Circuit reversed the lower court's finding with respect to the date of invention because the panel found that none of the documentary evidence was directed to the claimed invention, i.e., topical application of bimatoprost. Rather, the only evidence of conception was the oral testimony of a co-inventor, which the panel essentially dismissed outright.

Allergan further argued that even neglecting the date of invention, the Brandt publications were not "by another" because it represented the inventors' own work. In particular, Allergan argued that one of the co-inventors directed the clinical trials whose results were reported in the Brandt publications and, therefore, the Brandt publications represented the inventors' work.

Although the issue may have not been timely presented, the panel nevertheless held that Allergan's argument was unavailing. The panel noted that the co-inventor at issue was an author of one Brandt paper but not another. Furthermore, there was insufficient evidence presented to establish that the co-inventor was responsible for directing production of the contents of the Brandt publications. Accordingly, the panel held that the Brandt publications were prior art to the '404 patent.

Noting that the Brandt publications disclosed a substantial rate of eyelash hair growth as a side effect of using bimatoprost in eyedrops, and coupled with Johnstone's teaching that eye drops containing latanoprost (another PGF analog) promote eyelash hair growth when making topical contact with the eyelid, the panel held that the ordinary artisan would have had substantial motivation to follow Johnstone and use topical application of bimatoprost to grow eyelash hair and the Brandt publications provided a reasonable expectation of success. Accordingly, the panel held that the claims were obvious.

The Dissent

The dissent joined the majority in all respects except for obviousness of the '029 patent, agreeing with the District Court and Examiner that Johnstone's teachings were too vague and equivocal. In particular, the dissent thought Johnstone's teaching concerning the saturated α-chain of the PGF analogs was merely one item "serve[d] up [in] a menu of seemingly unlimited possibilities" that would cover "almost any conceivable prostaglandin," failing to provide sufficient "blaze marks" to the claimed invention. The dissent asserted that Johnstone's teachings regarding a saturated α-chain, rather than directing the ordinary artisan to a finite number of identified, predictable solutions, "proposes hundreds of thousands, or even millions, of variations on the alpha chain."

And the dissent further believed that the majority erred in minimizing the undisputed evidence that the field of hair growth was "unpredictable and mysterious."

August 28, 2014

In the first of a pair of decisions issued last Friday, Ferring B.V. v. Watson Laboratories, Inc., the Federal Circuit affirmed a finding by the District Court that a generic company could moot ANDA litigation by amending its application to exclude practice of an infringing article.

The case involved a generic form of Lysteda® (trans-4-(aminomethyl)cyclohexanecarboxylic acid, also called tranexemic acid), used to treat heavy menstrual bleeding. The drug was known in the prior art, but was also known to be associated with dosage-dependent gastrointestinal side effects. The Orange Book-listed patents-in-suit, U.S. Patent Nos. 7,947,739, 8,022,106, and 8,273,795, were directed to "modified release" formulations; claim 1 of the '106 patent is representative (according to the Court):

1. A tranexamic acid oral dosage form comprising: tranexamic acid or a pharmaceutically acceptable salt thereof; and a modified release material . . . ; wherein the modified release material is present in the formulation in an amount from about 10% to about 35% by weight [i.e., "wt%"] of the formulation; wherein said dosage form provides an in-vitro dissolution release rate of the tranexamic acid or pharmaceutically acceptable salt thereof, when measured by a USP 27 Apparatus Type II Paddle Method @ 50 RPM in 900 ml water at 37±0.5°C., of less than about 40% tranexamic acid or pharmaceutically acceptable salt thereof released at about 15 minutes, less than about 70% by weight tranexamic acid or pharmaceutically acceptable salt thereof released at about 45 minutes and not less than about 50% by weight of said tranexamic acid or pharmaceutically acceptable salt thereof released by about 90 minutes; and wherein each tranexamic acid oral dosage form provides a dose of about 650 mg tranexamic acid.

As discussed in the opinion, this formulation was intended to "match" the release rate of the drug with the drug uptake rate in vivo, thus reducing the adverse gastrointestinal side effects.

The opinion set forth the following table, showing the dissolution characteristics of the various formulations and the presence of each limitation in the broadest independent claim in each of the patents in suit; the opinion states that these characteristics are dispositive with regard to whether defendant Apotex's generic formulation infringes:

With regard to these characteristics, Apotex's original ANDA filing specified formulations wherein at least 80% of tranexamic acid would dissolve in 60 min.

The District Court construed a single term in the claims, concerning the meaning of the word "about" as used in the claim limitation "less than about [%] by weight" (emphasis in opinion). Both parties argued that the term "demarcate[d] particular numerical ranges," with Ferring contending that the word meant "within 10% [i.e., 'about 70%' means 63-77%]" and Apotex maintaining that it meant "within 5% [i.e., 'about 70% means 66.5-73.5%]. The District Court disagreed with both parties, construing the word to mean "approximately."

The experimental data adduced at trial from Apotex's "biobatches" showed that the generic formulation did not fall within either percentage range, but the District Court decided that that because Apotex's (original) ANDA did not specify the dissolution rate "the ANDA permitted Apotex to sell an infringing product" and "permitted [Apotex] to violate the patent," relying on its interpretation of Sunovion Pharmaceuticals, Inc. v. Teva Pharmaceuticals, Inc., 731 F.3d 1271 (Fed. Cir. 2013). In view of this determination, Apotex agreed that it would amend its ANDA to specify that its formulations would have a dissolution profile of "not less than 75 percent by weight of the tranexamic acid was released at 45 minutes." Apotex further made representations to Ferring, the District Court, and the FDA that it would not market a generic version of the branded drug having a different dissolution profile without informing Ferring, the District Court, and the FDA of the change. The District Court then dismissed the lawsuit based on these changes and representations.

The Federal Circuit affirmed, in an opinion by Judge Dyk joined by Judges Lourie and Reyna. The opinion reviewed the judgment of non-infringement under both the original and amended ANDA. With regard to the original ANDA, the Court held that the District Court erred in determining that the failure to specify a dissolution profile in the first ANDA and had misinterpreted the Court's Sunovion decision. Specifically, the panel disagreed with Ferring and the District Court that the Federal Circuit's Sunovion opinion was controlling, because the facts here are not the same as the facts in Sunovion. In that case, the Court stated, "the ANDA specified an infringing product," and that the ANDA applicant could not avoid infringement by "certifying that it would not infringe, overriding the language of its own ANDA." Here, the ANDA was silent regarding the characteristics that would establish infringement and thus did not specify an infringing product. Under these circumstances, the panel identified the correct precedent that governs to be Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562, 1570 (Fed. Cir.1997). The panels reasoning was based on who bears the burden of establishing infringement, the Federal Circuit disagreeing with Ferring, who argued that Apotex was bound to show that its product does not infringe (because whether or not it infringed was not specified in the ANDA). On the contrary, the Court ruled that the burden is on Ferring. And here, the evidence was that the Apotex product (from "bio-batch data") showed the Apotex product does not infringe. While this parsing of the evidentiary burdens is consistent with (but not dependent on) the Supreme Court's recent decision in Medtronic v. Mirowski, these circumstances may impose upon Ferring an on-going duty to monitor Apotex's marketed product that is an added burden.

With regard to infringement in view of the later amendments to Apotex's ANDA, the Federal Circuit reviewed the District Court's claim construction regarding the meaning of the word "about." If Ferring's construction is correct then the amended ANDA could infringe (because the "less than 75%" limitation falls within the +/- 10% interpretation espoused by Ferring (i.e., 70% is within the 63-77% range), while if Apotex's construction is adopted then its generic formulation would not (75% is not within the range of 66.5-73.5%). The Federal Circuit rejected the factual grounds (the U.S. Phamracopeia) asserted by Ferring for construing "about" to implicate its 10% variance in the specified about. Finding that the meaning of the word "about" was not defined in the specification, the Federal Circuit held that the District Court correctly construed the word "about" according to its ordinary and customary meaning to be "approximately," citing Merck & Co., Inc. v. Teva Pharms. USA, Inc., 395 F.3d 1364, 1369–70 (Fed. Cir. 2005) for that proposition. Using this construction, the Court further found that Ferring did not bear its burden of showing infringement ("Ferring, the party with the burden of proof on infringement, [produced no] evidence that the 2014 ANDA infringed by proposing a 75 percent by weight dissolution rate, under the district court's claim construction").

Finally, the opinion addressed Ferring's contention that under § 271(e)(4)(A), the District Court was compelled to order a change in the Apotex ANDA effective date, based on a finding of infringement under the terms of the ANDA as originally filed. The Federal Circuit rejected this proposition, finding that a district court should evaluate infringement by filing an ANDA on the basis of the originally filed ANDA and any amendments or other changes submitted to the FDA, citing Bayer AG v. Elan Pharmaceutical Research Corp., 212 F.3d 1241 (Fed. Cir. 2000). While the opinion recognizes that whether an amendment to an ANDA is considered is within the sound discretion of the district court, "guided by principles of fairness and prejudice to the patent-holder," the statute does not require resetting the ANDA filing date automatically with the filing of an amendment. Here, the District Court's refusal to reset was not an abuse of discretion according to the Court.

The Court also ordered costs to Apotex, suggesting that the panel did not believe that this was a sufficiently close case that justified Ferring's appeal.

June 12, 2014

Every once in a while a Federal Circuit panel construes a common claim term contrary to how it has been construed in prior precedent, usually based on the particular situation or circumstance the Court is addressing and consistent with the scope and meaning of the claim as supported by the claim term's plain meaning, use in the specification, and prosecution history. And as a consequence, commentators, pundits, and CLE providers create a flurry of activity surrounding whether there is now a new rubric of patent claim construction thus created (along with dire warnings that only if patent practitioners adhere to the recommendations arising from this "new" precedent can valid claims be acquired). Such an instance has arisen in the Court's Braintree Labs v. Novel Labs case, involving the meaning of the shortest claim limitation, the indefinite article "a."

This is an ANDA case relating to the product SUPREP® Bowel Prep Kit, a colonic purgative used in preparation for colonoscopies or other procedures requiring a clean inner lumen of the colon. This product is a combination of magnesium sulfate, potassium sulfate, and sodium sulfate, and has as an advantage over prior art products that it can be administered in relatively small amounts (100-500 mL) but does not cause severe shifts in electrolyte levels, which in prior art products had produced "heart failure, kidney failure, neurological impairment, and even death." Claim 15 of U.S. Patent No. 6,946,149 is representative:

A composition for inducing purgation of the colon of a patient, the composition comprising from about 100 mL to about 500 mL of an aqueous hypertonic solution comprising an effective amount of Na2SO4, an effective amount of Mg SO4, and an effective amount of K2SO4, wherein the composition does not produce any clinically significant electrolyte shifts and does not include phosphate. (Italics in original, indicating claim terms construed by the District Court.)

The District Court construed certain claim terms, granted summary judgment of infringement against ANDA filer Novel Labs, and held that the claims were not invalid for indefiniteness, anticipation, or obviousness over certain prior art.

The Federal Circuit affirmed in part, reversed in part, vacated in part, and remanded, in an opinion by (now Chief) Judge Prost, joined in part by Judges Dyk, who filed an opinion dissenting in part to a portion of the majority opinion; Judge Moore dissented. The opinion affirmed construction of the term "purgation" to mean less than complete colonic cleansing using 100-500mL of the composition (the kit contained 473 mL bottles that were diluted before use; it was uncontested that both bottles were needed for complete cleansing). The opinion held the District Court's construction of the term "clinically significant electrolyte shifts" was incorrect by including "other untoward effects" along with "alterations in blood chemistry that are outside the normal upper or lower limits of their normal range or other untoward effects." Rather, the opinion adopted a construction that limited the claim to mean ""alterations in blood chemistry that are outside the normal upper or lower limits of their normal range or other untoward effects." This change did not alter the correctness of the District Court's determination regarding Novel's failure to establish invalidity on anticipation, obviousness, or indefiniteness grounds, however.

The third construed claim term, the meaning of "a patient," did require the panel to vacate the lower court's grant of summary judgment of infringement to the patentee however. First, the District Court imported the term "a patient" (words contained in the preamble) into their construction of the "clinically significant electrolyte shifts" term and application of the construed claims to the accused infringing article. In its application of the claim term the District Court held that the term requires that "clinically significant electrolyte shifts" had been experienced by at least one patient, adopting the conventional construction for the word "a" as meaning "one or more." This construction was incorrect, according to the majority opinion (which Judge Moore did not join) because it would permit the accused infringer to be charged with infringement liability "even if 99 patients out of 100 experienced clinically significant electrolyte shifts, as long as one patient did not." In addition to the illogic of such a conclusion, the majority found support in the language of the specification and the claims, from which the panel majority concluded that the term must mean "the general class of persons to whom the patented compositions are directed, i.e., a patient population" (relying, inter alia, on language from the specification that the "objective was to find a well tolerated orally administered colonic purgative that . . . avoided the risks of upset or electrolyte balance in patients" (emphasis in opinion)). Because there was evidence of record that some individuals actually experienced "clinically significant electrolyte shifts," the panel vacated and remanded to the District Court for "further factual findings" on this issue.

Judge Moore dissented based on this construction of the word "a" as it modifies the word "patient" in the claims. According to her dissent, Judge Moore believes that the plain meaning of the word must be "one or more than one" and that the majority was in error in construing the term to exclude "one" patient. She cited precedent for this position, including 01 Communique Lab., Inc. v. LogMeIn, Inc., 687 F.3d 1292, 1297 (Fed. Cir. 2012); SanDisk Corp. v. Kingston Tech. Co., Inc., 695 F.3d 1348, 1360–61; Baldwin Graphic Sys., Inc. v. Siebert, Inc., 512 F.3d 1338, 1342 (Fed. Cir. 2008); Tivo, Inc. v. EchoStar Commc'ns Corp., 516 F.3d 1290, 1303–04 (Fed. Cir. 2008); and Insituform Techs., Inc. v. Cat Contracting, Inc., 99 F.3d 1098, 1105–06 (Fed. Cir. 1996) that "a" means "one or more than one" absent inventor lexicography or express disclaimer of scope, citing Thorner v. Sony Computer Entm't Am. LLC, 669 F.3d 1362, 1365 (Fed. Cir. 2012). She also found far less express use of the term "patient" solely in the plural in the specification or prosecution; indeed, her dissent cited several instances where the patentee used the singular ("a patient" or "a recipient") instead of the plural in this regard. Judge Moore disregarded the majority's concern with their hypothetical that the construction she advanced would find infringement if "99 out of 100 patients experienced clinically significant electrolyte shifts," which her opinion dismissed as being "a question of damages, not infringement," citing precedent to the effect that sporadic or "rare" infringement does not purge infringement but rather lowers the amount of damages for the infringement. In the context of ANDA litigation, Judge Moore realized that her interpretation could lead to the unpalatable consequence that a formulation that only avoids "clinically significant electrolyte shifts" in as little as one patient would be infringing and subject to the "de facto injunction" provided by the Hatch-Waxman Act.

Aberrant constructions of the word "a" have arisen before in the Federal Circuit's jurisprudence, including the case of Abtox v. Exitron (Fed. Cir. 1997). In that case, the question was whether a claim reciting "a metallic gas-confining chamber" in claim 3 of U.S. Patent No. 4,931,261 encompassed embodiments comprising a second chamber:

Apparatus for sterilization of medical devices and materials in a gas plasma comprising a metallic gas-confining chamber having a non-metallic portion, a microwave energy source including a microwave cavity positioned to couple microwave energy into said chamber through said non-metallic portion, and means for holding said medical devices and materials to be sterilized within said chamber volume and away from said microwave cavity, and including a perforated electrical shielding member positioned within said chamber and in close proximity to said microwave energy source to provide a portion of the internal volume of said chamber shielded from and away from said microwave energy providing a field free zone containing said devices and materials.

In that case, the Federal Circuit held, in an opinion by Judge Rader, joined by Judges Mayer and Michel, that the term "a metallic gas-confining chamber" did not encompass a device having separate chambers for the medical devices to be sterilized and the source of neutral particle plasma. The Court based its unanimous decision on the language of the examples and drawings contained in the specification, which showed that embodiments of the claimed device comprising microwave excitation of a gas to produce plasma only comprised a single chamber and thus the word "a" did not have its ordinary meaning of "one or more." The absence of express disclaimer (because this interpretation clearly relied on inference) or lexicography led some to opine that the Court had altered its traditional interpretation of the term, and resulted in (perhaps felicitously) more precise definitions in patent specifications where the term "a" was intended to mean one or more."

The exclusion of "one" from the construction of the word "a" in the Braintree case has likewise raised concerns, in this case for the Biotechnology Industry Organization (BIO) and the Pharmaceutical Researcher and Manufacturers of America (PhRMA), who have filed an amicus brief urging the Federal Circuit to rehear the issue (by the panel or en banc). According to their brief, the panel majority's construction "creates a conflict with [prior] precedent," "ignores basic science [in its rationale}," and "upset settled expectations [that] under[lie] enormous investment." The brief recites the same cases cited by Judge Moore in her dissent and more, and asserts that by not addressing Judge Moore's arguments the panel majority "provided no guidance for determining when its new rule of construction will apply" or provided "any other apparent limit on how far the majority's new rule extends" (and then recited the many other articles that could fall within this purportedly new rule of construction). The brief rebuts the "absurdity" rationale proffered by the majority by noting that "not all drugs work for all people," exemplifying this statement with the success or lack thereof of the combination of caffeine, aspirin, and acetaminophen at alleviating migraines (which is not effective for all migraine sufferers). The brief foresees additional needs for litigation in many other patent cases to determine infringement under circumstance where a substantial proportion of a "population" would not respond to a drug (noting classes of drugs, such as anticancer drugs for which there are a significant proportion of patient populations who are non-responders). Finally, the brief expounds on the "unsettled expectations" produced (in its members and otherwise) by the Court's decision in this case.

Whether or not this case is reviewed by the panel, the full Federal Circuit Court of Appeals, or even the Supreme Court, its claim construction decision once again illustrates the difficulties inherent in deciding the scope and meaning of claim terms in view of each patent's unique specification and prosecution history. Perhaps that is the lesson for these "outlier" claims: that there are no absolutes in claim construction upon which the patent drafter can rely, and each claim should be scrutinized during prosecution and drafting with a view that a court may at some later date need to determine what the claims were intended to exclude. Which is not such a bad way to craft or prosecute patent claims.

April 15, 2014

The Federal Circuit used its decision that the District Court erred in certain of its claim construction determinations to reverse a jury award of greater than $100 million, but left intact large portions of the District Court's claim construction and remanded for a retrial consisting mainly of reconsideration of the proper scope of damages.

The lawsuit involved U.S. Patent No. 5,727,554, which claimed an apparatus used to reduce damage to normal tissue during radiation therapy by producing a synchronization of radiation administration with patient movement such as breathing. The patent specification discloses the use of both natural (e.g., moles) or artificial (reflective surfaces) "fiducial" markings on patient skin used by the claimed apparatus to detect movement. Defendant Varian produces radiation equipment, including embodiments thereof comprising the accused infringing device, the "Real-Time Position Management ("RPM") Respiratory Gating System ("RPM System")" as an add-on option to their radiation equipment. The infringing device uses infrared camera to detect patient movement associated with reflective markers and synchronizes radiation treatment.

An earlier case between these parties was dismissed for lack of standing and appealed while this case was brought; during appeal of the first case (in which the Court reversed the decision to dismiss) Varian instituted an ex parte reexamination limited to claims 20-22 of the '554 patent; during the reexamination, Pittsburgh added claims 23-38. The ex parte reexamination was ultimately decided in favor of Pittsburgh.

Claims 20 and 22 are representative of the claims at issue:

20. Apparatus responsive to movement of a patient positioned on a patient positioning assembly, said apparatus comprising: camera means generating digital image signals representative of an image of said patient; and processing means comprising means determining movement of said patient from said digital image signals, including movement associated with breathing by said patient, and gating means generating gating signals synchronized with said movement associated with breathing by said patient.

22. The apparatus of claim 20 adapted for use during treatment of said patient with a radiation beam generated by a beam generator, wherein said gating means comprises means generating said gating signals synchronized to actuate said beam generator in synchronism with patient breathing.

The District Court determined that the radiation-generating portion of a claimed machine should be part of the infringing article (a decision having importance to the extent of the damages assessed). The parties stipulated that the phrase "means determining movement of said patient" is a means-plus- function term, but the parties differed on whether the disclosed structure corresponding to the means was "a computer processor programmed to perform a two-step algorithm[,] as Pitt contended, or a thirty-step algorithm, as Varian contended." The court-appointed special master weighed in at trial, recommending that the correct structure was "[a] computer processor programmed as a patient motion detector that (1) identifies at least one fiducial from the image signals; and (2) tracks its movement; and equivalents" thereof.

Claim 38 was added during the reexamination:

38. The apparatus of claim 20, further comprising a beam generator configured to provide computer-controlled multi-beam conformal dynamic radio therapy for said patient, wherein said gating signals are synchronized to actuate said beam generator in synchronism with patient breathing.

According to the Special Master, this claim encompassed:

[A] beam generator configured to provide radiation therapy under computer control. The radiation therapy treatment involves using radiation beams corresponding to the shape of the target. The beam generator is configured to be repeatedly re-positioned to irradiate the target with multiple treatment beams, each from a different direction.

The District Court granted summary judgment to Pittsburgh on infringement of claims 20, 21, 25, 26 and 36 by Varian devices comprising the RPM System itself; infringement of claims 22 and 38 by embodiments comprising radiation beam generator; and that Varian's actions satisfied the objective prong of the Court's willfulness assessment.

The District Court presided over a trifurcated trial on willfulness (the jury finding subjective willfulness, damages (awarding royalties for past damages), and invalidity. The total award entered by the Court was greater that $100 million.

The Federal Circuit, in an opinion by Judge O'Malley joined by Judge Lourie, affirmed in part (claim construction of claim 20), reversed in part (claim construction of claim 22 and the Court's determination that infringement was willful) vacated the overall damages award but affirmed the damages assessed for infringement of claim 38, and remanded to the trial court. Judge Dyk dissented.

The panel majority's reversal of the willfulness award was based on its determination that Varian's invalidity positions, while not sufficient to satisfy the clear and convincing evidence requirement, were not objectively baseless, and its vacature of damages with regard to infringement of claim 22 was because the Court found that damages should only be assessed on the RPM system itself. The Court construed claim 20 to recite means supported in the specification by disclosure of a two-step algorithm, the two steps comprising "first identifying fiducials and then tracking those fiducials." The panel rejected Varian's reliance on drawings in support of its claim construction position as being "merely implementations of the algorithm" that can be applied as needed. According to the opinion:

The district court properly located the disclosure of an algorithm that covered what was necessary to perform the claimed function of detecting patient movement and nothing more. Varian's attempt to pick and choose which steps it deems necessary by synthesizing steps from disparate portions of the written description is too limiting. The algorithm need only include what is necessary to perform the claimed function.

Under this construction the Court also rejected Varian's non-infringement arguments regarding claim 20: Varian argued that its RPM System only tracked the fiducials, not patient movement itself and thus did not meet the claim limitation of "determin[ing] movement of the patient from the digital image signals of the patient." The panel disagreed, using Varian's own argument:

Varian's infringement argument is belied by its own admission. Varian admits that the RPM System camera captures patient images to identify the location of the fiducials and only then eliminates the image of the patient. In other words, the RPM System uses the image of the patient and then processes that image to identify and extract from it the portions representing the fiducials.

The opinion also noted that the District Court had found that the phrase "image of said patient" in claim 20 encompassed "both images of fiducials and images of the patient image."

The Federal Circuit panel reversed the jury's willfulness determination because Varian's invalidity arguments not objectively baseless -- the panel found that the cited prior art patent related to solving same problem used a "mark" such as a laser line as the reference, projected on patient and "continually tracked" during radiation treatment. In this regard, the panel noted that the PTO had initially rejected the claims over this reference during reexamination based on this reference. The opinion notes that this rejection is evidence that the assertion of an invalidity defense, and infringement based on the likelihood that the '554 patent claims were invalid in view of the reference was not objectively unreasonable. The Court also found that the District Court did not provide sufficient explanation for its contrary conclusion in view of the expert evidence presented at trial.

The Court's assessment of the damages award contained a determination that the District Court had erred in construing some of the claims as having a scope that encompassed some of Varian's accused infringing devices. Specifically, the panel reviewed the basis for the damages award, which were a 10.5% royalty on RPM System sales (for infringement of claim 20) and a 1.5% award on integrated systems comprising the RPM System and the radiation beam device (for infringement of claims 22 and 38). Varian did not specifically object to the damages award relating to the RPM System itself, except to contend that it does not infringe. On the other hand, Varian did ask the Court to vacate the damages award for infringement of claims 22 and 38, for three reasons. First, Varian argued that damages for the period during which the '554 patent was undergoing reexamination were improper because the limitation relating to inclusion of the radiation source were not in the claim as presented in the reexamination. Second, Varian argued that the District Court improperly calculated those damages. And third, Varian argued (briefly according to the panel) that the award violates 35 U.S.C. § 284.

With regard to claim 22, the panel agreed with Varian that the claim term "adapted for use during treatment of said patient with a radiation beam generated by a beam generator" did not include the beam generator within the scope of the claim and, thus, it was error for the jury to find infringement and award damages for sales of Varian's devices comprising the combination of a radiation beam generator and the RPM System. Claim 38, on the other hand, did include the beam generator as an affirmative limitation. In this instance, the Court rejected Varian's argument that the policy concerns enunciated in Garretson v. Clark, 111 U.S. 120 (1884), as relied upon under Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1337 (Fed. Cir. 2009), required that the entire market value rule ("EMVR") be applied to the damages calculation. The Court based this decision on the inclusion of the beam generator as a claimed component within the scope of the claim. "As such," according to the Court, "Varian's argument fails because Pitt is not attempting to include the value of unpatented features within its royalty base. The beam generator is incorporated into the linear accelerator in claim 38; it is the combination apparatus that is claimed." In this regard, the Court discussed the proper application of the factors enunciated in Georgia–Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970), to distinguish between a patented invention that merely adds "incremental value to the conventional element(s)" and an invention that "adds significant value to conventional elements." At trial, the jury heard expert testimony and received evidence from Varian itself that supported the value of the combination of Varian's beam generator and the RPM System as recited in claim 38. As a result, the Court determined that:

Put simply, the evidence the jury heard regarding the Georgia-Pacific factors and how those factors might impact any value added by the RPM System to the combination devices claimed in claim 38, the evidence and argument it heard regarding the need to guard against application of an unduly high royalty rate on sales of linear accelerators so as to not award Pitt for what it did not invent, and the fact that the jury was instructed on all the Georgia-Pacific factors and was instructed that it was free to award a zero percent royalty on the linear accelerators, were sufficient to guard against any unduly excessive damages award in this case. On this record, the Georgia-Pacific factors were sufficient to safeguard against over compensation for the infringing combination sales at issue.

After distinguishing various pre-Georgia Pacific decisions from various Circuit Courts of Appeal, the opinion "emphasize[d] the fact- and record-specific nature of [the] holding," particularly the extent to which Varian's own arguments and reliance of certain Georgia Pacific factors rendered inconsistent their arguments on appeal that were not persuasive and the Court affirmed the damages awarded by the jury in recompense of Varian's infringement of claim 38.

Judge Dyk dissented, based on his differing opinion on the proper construction of claim 20 and 22 and 38 depending therefrom. In Judge Dyk's view, claim 20, being a means-plus-function claim, must be supported by express disclosure in the specification of structural embodiments of the recited means. Here, because Judge Dyk appreciates that the recited function is performed by a computer, in his view the only proper support for a computer means requires disclosure of the computer program that executes the means. Judge Dyk believes that the computer means disclosed in the specification does not perform all the steps necessary to practice the claimed method, and thus that the claims as construed by the majority would be invalid for failure to be supported by a specification that satisfies the written description requirement of 35 U.S.C. § 112(a). For Judge Dyk, this indicates that there was an error in claim construction below and he would remand for reconsideration of infringement under the correct claim construction.

April 09, 2014

Claim construction in patent cases, and the propensity for the Federal Circuit to disagree with a district court's conclusions regarding the scope and meaning of claim terms, remains one of the most vexing aspects of patent litigation (yes, even more so than the vaunted "troll" problem; and if you think the Supreme Court will improve the situation in deciding Teva Pharmaceuticals v. Sandoz, you haven't been paying attention). The problems with the current jurisprudential situation regarding claim construction are nicely illustrated by the Court's decision in Shire Development, LLC v. Watson Pharmaceuticals, Inc., which doesn't appear to be anything more than an exercise in exegesis with little seeming relevance to the ultimate question of whether Watson's generic drug does or does not infringe Shire's claims.

The lawsuit involved Watson's ANDA filing seeking approval for a generic version of Shire's controlled-release oral pharmaceutical composition for the treatment of inflammatory bowel disease, Crohn's disease and ulcerative colitis, sold by Shire under the brand name LIALDA®. Shire listed U.S. Patent No. 6,773,720 in the Orange Book having claims for is patented formulations of the active pharmaceutical ingredient mesalamine (5-amino salicylic acid). These formulations were characterized as having high concentrations (85-90% by weight) of the API. The formulations contain an "inner hydrophobic matrix" and an "outer hydrophilic matrix," as used in the following representative claims of the '720 patent:

1. Controlled-release oral pharmaceutical compositions containing as an active ingredient 5- amino-salicylic acid, comprising: a) an inner lipophilic matrix consisting of sub- stances selected from the group consisting of unsaturated and/or hydrogenated fatty acid, salts, esters or amides thereof, fatty acid mono-, di- or triglycerid[e]s, waxes, ceramides, and cholesterol derivatives with melting points below 90° C., and wherein the active ingredient is dispersed both in said the lipophilic matrix and in the hydrophilic matrix; b) an outer hydrophilic matrix wherein the lipophilic matrix is dispersed, and said outer hydrophilic matrix consists of compounds selected from the group consisting of polymers or copolymers of acrylic or methacrylic acid, alkylvinyl polymers, hydroxyalkyl celluloses, carboxyalkyl celluloses, polysaccharides, dextrins, pectins, starches and derivatives, alginic acid, and natural or synthetic gums; c) optionally other excipients; wherein the active ingredient is present in an amount of 80 to 95% by weight of the total composition, and wherein the active ingredient is dispersed both in the lipophilic matrix and in the hydrophilic matrix.

The claimed formulations provide the "sustained and uniform manner" by which the mesalamine API is released as the drug passes through the gut.

The District Court construed the term ""inner hydrophobic matrix" to mean "a matrix including at least one lipophilic excipient, where the matrix is located within one or more substances," and construed "outer hydrophilic matrix" to mean "a matrix of at least one hydrophilic excipient, where the matrix is located outside the inner lipophilic matrix."

The Federal Circuit disagreed, in an opinion by Judge Hughes joined by Chief Judge Rader and Judge Prost. The Court held that these constructions did not comport with the "ordinary and customary" meanings of the claim terms (which, while each word in each phrase may have such a meaning as used in the claim each phrase would seem to have a particular meaning as defined by the specification) because these constructions were "impermissibly broad." Specifically, the panel held that the District Court had properly construed the term "matrix" in each instance as "a macroscopically homogeneous structure in all its volume." The panel's disagreement with the lower court's construction was prompted by its construction of a "lipophilic matrix" as "a matrix that includes at least one lipophilic excipient." According to the Court, this was error because "[it] erroneously focuses on the lipophilic properties of an excipient in the matrix, rather than the properties of the matrix itself." The intrinsic evidence in the Court's view mandates a construction wherein lipophilicity (or, for that matter the hydrophilicity) is a characteristic of the matrix, not the excipient in the matrix. The opinion finds support for these distinctions in the specification.

The Court also reviewed the District Court's rejection of Watson's contention that the two matrices must be "separate and distinct." At trial, Watson had argued that the claims should be limited to matrices that were separate and distinct due to prosecution disclaimer, i.e., as a consequence of arguments advanced during prosecution to overcome inter alia claim rejections based on certain cited prior art. The grounds for the District Court's decision not to construe Shire's claims to be encumbered by this limitation was that "no where in the prosecution history, claims, or specification does the term 'separate and distinct' appear," and that the nature of patent prosecution limits a conclusion that there was prosecution disclaimer to instances where there is "a clear and unambiguous disavowal" of the disputed claims scope. The Federal Circuit agreed in an interesting display of semantics: according to the opinion, "[d]uring prosecution, Shire carefully characterized the prior art as not having separate matrices but never actually stated that the claimed invention does have separate matrices" (emphasis in opinion). Nevertheless, this same prosecution history, as well as "the structure of the claim itself, the ordinary meaning of the claim terms, including the Markush group limitations, and the patent's description of the invention compel a claim construction which requires that the inner lipophilic matrix is separate from the outer hydrophilic matrix" (and the opinion notes that the "separateness" of the two matrices was admitted by Shire's counsel at oral argument). Apparently wishing there to be no doubt on remand by the District Court on this point, the opinion further notes that a matrix cannot be both "inner" and "outer" nor "lipophilic" and "hydrophilic" and thus the matrices must under a "logical reading" be separate. It is here that a possible basis for the panel's dissatisfaction with the District Court's construction becomes evident, the opinion stating that "a matrix comprised of only one lipophilic substance and several hydrophilic substances -- and thus capable of exhibiting hydrophilic properties -- would meet the District Court's construction of "lipophilic matrix" which would be contrary to the requirement that the matrices be separate.

Accordingly, with these instructions the panel reversed the judgment below of infringement and remanded the case back to the District Court for trial on the merits using the panel's claim construction. There is no evidence in the record whether any of the distinctions drawn by the Federal Circuit in its opinion can be expected to (or even capable of) changing the District Court's determination of infringement on remand.

Rule 52(a) of the Federal Rules of Civil Procedure provides that in matters tried to district court, the court's "[f]indings of fact . . . must not be set aside unless clearly erroneous."

The question presented is as follows:

Whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.

This case was appealed from the Federal Circuit case of the same name (Teva Pharmaceuticals USA, Inc. v. Sandoz Inc., 723 F.3d 1363 (Fed. Cir. 2013)). In that case, the Federal Circuit overturned a District Court's claim construction determination, holding instead that claims with the term "molecular weight" were indefinite (because the term could not be construed). As we reported at the time, there are at least three different ways to calculate average molecular weight. The District Court had considered the intrinsic evidence and testimony of experts, and came to the conclusion that "molecular weight" and "average molecular weight" denote Mp, or peak average molecular weight. As expressed by the Federal Circuit: "[o]n de novo review of the district court's indefiniteness holding, we conclude that [Teva's expert's] testimony does not save Group I claims from indefiniteness."

This grant of certiorari comes on the heels of the Federal Circuit's en banc decision in Lighting Ballast Control LLC. v. Philips Electronics N.A. Corp. on February 21, 2014. That case reconsidered, and affirmed, the holding in Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), which itself established the standard of appellate review for claim construction decisions. The Cybor Corp. Court applied the Supreme Court's Markman v. Westview Instruments, Inc. case to the issue of standard of review, reasoning that if claim construction was a matter of law, then review should be de novo. The Lighting Ballast majority applied the principals of stare decisis to confirm this Cybor standard. The two other views expressed in that case, and which will certainly be expressed in the Teva briefing, are that either the entire claim construction determination should be reviewed for clear error, or that review should be a hybrid of de novo and deferential review. With regard to the former, Lighting Ballast had argued that the Supreme Court's Markman decision was only concerned with whether claim construction could be heard by a jury or whether it was solely within the purview of the judge. Because construing patent claims often involves expert testimony and documentary evidence, the deferential standard of clear error should apply. In contrast, several amici curiae advocated the hybrid approach, including most notably the United States. This approach would maintain the ultimate determination of claim construction as a "purely legal" matter, but would acknowledge that there are factual aspects to any determination. The Supreme Court often gives considerable weight to the opinion expressed by the United States, but in this case, the framing of the question presented may reveal that the Court is leaning a different way. Patent Docs will, or course, continue to monitor this case and provide any updates as warranted.

February 26, 2014

The Federal Circuit issued an opinion on Monday in GlaxoSmithKline LLC v. Banner Pharmacaps, Inc. illustrating how difficult it can be to overturn a district court determination based on a question of fact, at least when the question involves a chemical compound defined by structural properties supported by a description of how such a compound can be made.

The lawsuit involved the drug dutasteride, sold by GSK under the brand names Avodart®and Jalyn™ for the treatment of "androgen responsive diseases," and GSK brought suit under the provisions of 35 U.S.C. § 271(e)(2) following ANDA filings by defendants Banner Pharmacaps, Inc., Impax Laboratories, Inc., Mylan, Inc., Mylan Pharmaceuticals, Inc., and Watson Laboratories, Inc. The claim at issue, from Orange Book listed U.S. Patent No. 5,565,467, recited in its entirety "17β-N-(2,5-bis (trifluoromethyl)) phenylcarbamoyl-4-aza-5α-androst-1-en-3-one or a pharmaceutically acceptable solvate thereof." The District Court rendered judgment against all defendants, who had stipulated infringement, ruling that defendants failed to establish by clear and convincing evidence that this claim was invalid for "anticipation, lack of utility, lack of enablement, and inadequacy of the written description."

On appeal, Defendants challenged the District Court's claim construction with regard to the scope and meaning of the term "a pharmaceutically acceptable solvate thereof" as that construction was relevant to their written description defense. The Federal Circuit affirmed, in an opinion by Judge Taranto joined by Judges O'Malley and Wallach. Curiously, the opinion did not resolve defendants' challenge to the District Court's interpretation of the term "solvate." Instead, the Court set forth its understanding of the meaning of the term, specifically that a solvate "is something that originates in a 'solution,' which is a mixture of two substances: a 'solute' dissolved in a 'solvent.'" This definition is consistent with the positions of both parties, according to the opinion, and in addition that the parties agree that a solvate can be in the form of a crystal. The disagreement between the parties concerned whether a solvate must be in a crystalline form (defendants' position) or not (GSK's position. While there was "considerable extrinsic evidence" supporting defendants' position, the District Court relied upon the express teachings in the '467 patent specification in deciding that the claimed solvates were not limited to crystalline forms, wherein a solvate was defined as:

A complex formed by dutasteride with a solvent in which dutasteride is reacted or from which it is precipitated or crystallized.

Solvates according to the specification can be produced "by a reaction of dutasteride with a solvent; by precipitation of a complex from a solution of dutasteride and a solvent; by crystallization of a complex from a solution of dutasteride and a solvent," without a requirement that the solvate produced by any of these methods be in the crystalline form.

Adequacy of a specification's written description is a question of fact (reviewed for clear error by the Federal Circuit), and accordingly the Federal Circuit's opinion set forth the District Court's factual findings in support of its decision that defendants had failed to establish invalidity on these grounds. Specifically, the opinion set forth the District Court's findings that methods for producing solvates of steroid compounds (like dutasteride) were well known in the art and that the "universe of solvents thought to be pharmaceutically acceptable was well-known and relatively small." While it was impossible to predict whether any particular solvate produced according to these well-known methods would be pharmaceutically acceptable, the District Court found that methods for determining pharmaceutical acceptability were also well known in the art. Regarding the adequacy of defendants' challenge, the District Court found that:

There is no reason why a person skilled in the art would not credit a patentee with possession of a solvate merely because the patentee did not disclose solvates formed by each solvation process, i.e., reaction, precipitation, crystallization.

In the Federal Circuit's opinion, Judge Taranto noted the limited scope of the issue on appeal, and that defendants had not properly included a challenge on whether the specification adequately described the range of pharmaceutically acceptable solvates encompassed by the '467 patent claim. Under either plaintiff's or defendants' claim construction, the Court found that the term "solvate" was one "defined by structure and by the process of creating it" rather than by its function. The Federal Circuit recognized that the District Court construed the term to comprise "any complex of dutasteride and solvent" that resulted from any of the described methods:

In either event [plaintiff's or defendants' claim interpretation], the written description, which presents materially the same interpretive choice, describes the same class by identifying a particular structure obtained by particular processes. No matter which construction is adopted, the term "solvate" involves no performance property (the claimed compound need not perform an identified function or produce an identified result) and hence raises no issue of insufficient structural, creation-process, or other descriptions to support such a property.

Turning to the specification, the opinion asserts that the language defines the genus of pharmaceutically acceptable solvates as "a complex of dutasteride molecules and solvent molecules, with dutasteride being, as the district court found, 'the key structural component'" and "one that is created by an identified process -- specifically, by dissolving dutasteride (the solute) in a solvent." Noting the parties dispute the meaning of these teachings from the specification, the opinion states that "under each side's construction and reading of the specification, the description matches the claim, and regardless of which side is right, the description remains entirely based on structure of the compound and its process of creation." Citing Ariad v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc), Regents of the Univ. of California v. Eli Lilly & Co., 119 F.3d 1559, 1568 (Fed. Cir. 1997), and Boston Scientific Corp. v. Johnson & Johnson, 647 F.3d 1353, 1366-67 (Fed. Cir. 2011), the opinion notes that this structural description is consistent with the Court's written description jurisprudence. Here, the Court finds that claim scope is "no broader" than what is described in the specification, "whether [that scope] is narrow or broad, as the parties dispute," and that the term "solvate" is structural nor functional in nature (a "critical" distinction according to the opinion, albeit a sentiment followed by statements regarding the adequacy of the description to "make and use" the invention that seemingly introduces questions of enablement into the written description analysis). The Court draws this "structural vs. functional" difference in distinguishing case law cited by defendants in support of their position, because "[h]ere, []under any of the parties' preferred claim constructions, 'solvates' of dutasteride are not distinguished by a particular performance property." Accordingly, the panel could find "no basis" for overturning the District Court's finding that the claims were adequately described.

February 06, 2014

The standard of review at the Federal Circuit is important. Even though it often appears like cases are re-litigated at the Appeals Court, it is actually very difficult (or at least should be) to overturn a lower court's factual determinations. This is especially true for a finding that a patent was not shown to be invalid, because the burden at the trial court is clear and convincing evidence. Moreover, the standard of review for any factual determination made by the lower court is "clear error." This high standard might just have been the reason that the Federal Circuit upheld the validity of Pfizer’s Lyrica® patents earlier today in Pfizer Inc. v. Teva Pharmaceuticals USA, Inc.

Lyrica® is a drug for treating seizures and certain types of pain. The present case was brought pursuant to the Hatch-Waxman scheme of 35 U.S.C. § 271(e)(2) after several companies filed ANDAs to market a generic version of this drug. These companies included Teva, Sun Pharma Global, Inc, Mylan Pharmaceuticals, and about nine other companies. Plaintiffs, which included Pfizer, CP Pharmaceuticals International C.V., Warner-Lambert Company LLC, and Northwestern University, asserted two patents, U.S. Patent No. 6,197,819 ("'819 patent") and U.S. Reissue Patent No. RE41,920 ("RE '920 patent"). Ultimately, only claim 2 of the '819 patent was at issue on appeal. This claim reads:

This compound is also known as 3-isobutylGABA. The active ingredient in Lyrica® is the S-enantiomer of this compound, which is specifically claimed in claim 1 of the same patent. Based on the lower court claim construction of claim 2, the Appellants stipulated to infringement. In addition, the trial court found that the Appellants had not established with clear and convincing evidence that claim 2 was invalid as non-enabled, not described, or obvious. As their moniker would suggest, the Appellants appealed these determinations.

Claim Construction and Infringement

The first issue was the construction of the claim term "4-amino-3-(2-methylpropyl) butanoic acid." Of course, claim construction is a matter of law, which the Federal Circuit reviews de novo, thanks to Cybor Corp. The lower court had construed this term to cover 3-isobutylGABA generally, and therefore it would cover racemic mixtures, pure enantiomers, or any ratio in between. The Appellants alleged that the term should be limited to the racemic (50:50) mixture, based on statements made in the specification and the prosecution history. They were, of course, advocating such a construction because their proposed products contained non-racemic mixtures, and therefore would have avoided infringement.

Nevertheless, the Federal Circuit agreed with the lower court that the plain and ordinary meaning of the claim term does not include such a narrowing limitation. In fact, the Court noted that the use of the terms "racemate," "racemic," the prefix (R,S) by the inventors in the application indicated that they had no such intention to so limit the claims. "[T]he patentee's use of the prefix in the tables demonstrates that it knew how to specify racemic 3-isobutylGABA as distinguished from the compound generally and chose not to do so in claim 2." Slip Opinion at 9-10. The Appellants pointed to the fact that only racemic mixtures were discussed in the "results" section of the specification. However, "[a]bsent a clear disavowal or lexicographic definition in the specification or the prosecution history, the reporting of test results limited to a racemate does not warrant importing a racemic limitation into claim 2." Because Appellants stipulated to infringement under this construction, the Court affirmed that finding.

Enablement

Even though enablement is a question of law, and therefore reviewed without deference, the underlying factual inquiries are reviewed for clear error. The District Court had held that a person of ordinary skill in the art could have made the claimed 3-isobutylGABA compound with no more than routine experimentation based on the disclosure in the '692 application's specification. The '692 application was filed in 1990, and if it did not enable claim 2, intervening art before the '819 patents filing date may have invalidated the claim. The Appellants had argued that, because the 3-isobutylGABA claim term was construed to cover all enantiomeric ratios, the patent disclosure must teach "every conceivable mixture," including 100% pure enantiomers. The trial court had found that there was no dispute that the co-inventors were the first to create and claim the "3-isobutylGABA" chemical compound. In addition, the court had found that the specification stated that "enantiomers may be prepared or isolated by methods already well known in the art," and that there was sufficient support for this statement based on "the prior art, the prosecution history, and witnesses' trial testimonies." Id. at 12.

The Federal Circuit did not believe that this determination was clearly erroneous, and therefore it affirmed that claim 2 was not invalid for lack of enablement. In response to the Appellants' contention that the specification provides no guidance as to how to purify the two enantiomers, the Federal Circuit stated that "the inventors were not required to provide a detailed recipe for preparing every conceivable permutation of the compound they invented to be entitled to a claim covering that compound." Id. The Court pointed out that "[w]here a claim has been construed to cover a chemical compound, the specification is not deficient merely because it does not disclose how to prepare a particular form or mixture -- among hundreds of possible permutations -- of that compound." Id. In other words, the Federal Circuit appears to be saying that to satisfy the enablement requirement, one need not enable the entire scope of genus claim. This is at least true if the methods of generating the full scope are well known in the art.

Written Description

Of all of the Appellants, only Sun pursued invalidity of claim 2 for failing the written description requirement. This determination is a question of fact, and therefore is reviewed for clear error. Sun's principal argument was that the '692 application discloses nothing that would suggest that the inventors could isolate the individual enantiomers. As such, they could not have been in possession of the entire scope of claim 2. In fact, later applications provided support for the proposition that the inventors were not able to separate the enantiomers as of the filing date of the '692 application. Nevertheless, the Federal Circuit found that Sun's argument was "surprisingly similar" to the other parties' position on enablement. Important in the Court's decision was that claim 2 was a genus claim that encompassed all mixtures of the enantiomers. "But written description does not require inventors, at the time of their application for a patent, to reduce to practice and be in physical possession of every species . . . of a genus . . . claim." Id. at 14. It probably did not help Sun's cause that the lower court found that it presented a "dearth of evidence at trial . . . ." Id. at 13. As such, the Federal Circuit affirmed the lower court's finding that the '692 application contained an adequate written description for claim 2.

Obviousness

Finally, the Federal Circuit affirmed the lower court's determination that the claimed invention was not obvious. Such a determination is legal in nature, but it is based on underlying facts. The Appellants' argued on appeal that the lower court committed clear error for failing to find the following: (1) that three references, U.S. Patent No. 4,322,440 ("Fish"), U.S. Patent No. 5,051,448 ("Shashoua"), and a 1962 article ("Colonge"), taught that isopropylGABA may have anticonvulsant activity; (2) that a skilled artisan would have expected 3-isobutylGABA would have had the same activity as isopropylGABA because of structural similarity; and (3) 3-alkylGABA, a prior art compound, provided the motivation to try other alkyl substituents at the 3-position. However, the Court suggested that the Appellants' real failing was that "the evidence presented at trial was too sparse." Id. at 17.

The determination that a new chemical compound is obvious is a two-step process. First, the court must determine whether a particular "lead" compound would have been selected by a skilled artisan. Second, it must be established that one skilled in the art would have been motivated to modify the lead compound to derive the claimed invention. Unfortunately for Appellants, the record below contained "scant evidence" to establish either gabapentin or 3-isopropylGABA as lead compounds. Even though Appellants may have established that both of these compounds were being tested for anticonvulsant effects, Appellants presented "no testimony establishing its being tested prior to the discovery of 3-isobutylGABA." Id. at 18. With regard to gabapentin, the Court found that "there was no evidence in the record of motivation for a skilled artisan to modify gabapentin for further anticonvulsant research." Id. The evidence related to 3-isopropylGABA was described as "just as meager." Id. Even though Fish, Shashoua, and Colonge may have disclosed the compound, the lower court found that the record lacked "any explanation for 'what structures were important for anticonvulsant activity[.]'" Id. As such, there was simply no reason to select 3-isopropylGABA for further modification.

There was also a lack of evidence to establish the second step. Appellants alleged that the three prior art references would have taught modifying the 3-position with "lower alkyl substitutes." However, even though these references disclosed "trillions" of compounds, they did not call out alkyl groups, much less isobutyl substitutions. "Indeed, a vague suggestion in the prior art pointing to a broad class of compounds, without any teaching particularly identifying isobutyl among the millions of potential compounds, is not a teaching of 'specific molecular modifications' required by [Federal Circuit] precedent." Id. at 20. The lower court had found that Pfizer credibly established that drug discovery in the anticonvulsant field was "complicated," "highly unpredictable," and "largely conducted through trial and error." Id. As such, there would have been no reasonable expectation of success to teach any substitution at the 3-position.

The important take away lesson from this case is to focus on the standard of review at the Federal Circuit, especially if you are challenging a finding that a patent is not invalid. It is also essential that get all of your evidence in at trial. This is because if you need to prove that the lower court's determination was clearly erroneous, you had better have presented sufficient evidence at trial to establish that fact.

December 30, 2013

A classic example of product "evergreening" is how AstraZeneca used its experience with its omeprazole franchise (sold for over a decade as Prilosec®) to promote an alternative form of the drug, Nexium® (particularly, the S-omeprazole enantiomer) as "the little purple pill." One reason this strategy deserves admiration is that it is not the type of evergreening that some commentators and politicians have objected to (such as using formulation or other types of patents to continue protection after the composition patent has expired; for the record, there is nothing improper about that type of evergreening, either). But no strategy is perfect, as AstraZeneca found when the Federal Circuit affirmed a District Court judgment of non-infringement in AstraZeneca v. Hanmi.

The claimed invention was directed to the magnesium salts of the esomeprazole isomer sold as Nexium®. AstraZeneca filed suit under 35 U.S.C. § 271(e)(2) after receiving notice that Hanmi had submitted an ANDA for a generic version of the drug comprising the strontium salt of esomeprazole. The claims of the Orange Book listed patents in suit (U.S. Patent Nos. 5,714,504 and 5,877,192) as filed and the specification recited six specific cations as components of the enantiomeric salts of the invention: Na+, Mg2+, Li+, K+, Ca2+, or N+(R)4, where R is an alkyl with one to four carbons (the latter cation is also called generically an ammonium ion). However, the issued claims recited the esomeprazole isomer more generically as an "alkaline" salt, as in Claim 1 of the '504 patent:

A pharmaceutical formulation for oral administration comprising a pure solid state alkaline salt of the (-)-enantiomer of 5-methoxy-2[[(4-methoxy-3,5-dimethyl-2-pyridinyl)methyl]sulfinyl]-1H-benzimidazole and a pharmaceutically acceptable carrier.

The District Court construed this and all the claims at issue to be limited to esomeprazole salts of the six specific cations recited in the specification, and the parties conceded that under this construction Hanmi's strontium salt formulation did not infringe. AstraZeneca appealed, on the basis that these cations were exemplary and that the skilled worker would recognize that the patents were entitled to the broader scope of "alkaline salts" that would encompass Hanmi's strontium salt of esomeprazole.

The Federal Circuit disagreed with AstraZeneca's arguments, in an opinion by Judge Taranto joined by Judges Dyk and Moore. The Court found that while the plain meaning of the term "alkaline salt" would encompass Hanmi's strontium salt, "[b]y conspicuously choosing only certain members of the class, and using the language [in the patent specifications that] it did, AstraZeneca conveyed a clear and definitive meaning that it was disclaiming other members of the class" including Hanmi's strontium salts. The Court cited portions of the specification in support of this construction, for example, "[t]he first sentence of the Detailed Description":

The present invention refers to the new Na+, Mg2+, Li+, K+, Ca2+ or N+(R)4 salts of the single enantiomers of omeprazole, where R is an alkyl with 1-4 carbon atoms, i.e. Na+, Mg2+, Li+, K+, Ca2+ or N+(R)4 salts of (+)-[omeprazole] and (-)-[omeprazole], where R is an alkyl with 1-4 carbon atoms.

This disclosure is specific, not generic according to the Court, and amounts to an express disclaimer of the scope of the claims AstraZeneca sought in litigation against Hanmi.

The Court further held that this disclaimer was not overcome by more generic language in the specification, when taken in context, because there was no evidence that AstraZeneca used the more generic terms in any sense other than joined by express recitation of the six exemplary cations. Neither the prosecution history nor the doctrine of claim differentiation was persuasive to the Court; with regard to the latter of AstraZeneca's asserted grounds of error, the Court stated that "the doctrine of claim differentiation does not . . . override clear statements of scope in the specification" citing Toro Co. v. White Consol. Indus., Inc., 199 F.3d 1295, 1302 (Fed. Cir. 1999).

Regarding AstraZeneca's prosecution history arguments, at least a part of the Court's reasoning for its decision is that it perceived from the prosecution history that the focus of what AstraZeneca was trying to protect changed during prosecution. Specifically, the Court noted that AstraZeneca "conducted experiments that led it to conclude that one of the two enantiomers gave particularly good results," i.e., that which of the separated enantiomers (if either) was preferable was only known after the patent application was filed. As a result, AstraZeneca "filed amended claims to focus on that enantiomer" in response to a rejection:

When AstraZeneca filed the application that issued as the '504 patent, the language of the claims aligned perfectly with the written description's clear language about the scope of the "present invention": the broadest of the claims were limited in terms to salts using the six identified cations, combined with either one of the two omeprazole enantiomers. . . . After the Examiner rejected those claims for anticipation and obviousness, . . . AstraZeneca shifted the focus to unexpected benefits achieved by using the (-)-enantiomer rather than the (+)-enantiomer. Whereas the original claims and written description treated the two enantiomers with parity, AstraZeneca now distinguished the prior art by amending the claims to cover only esomeprazole, which it argued "unexpectedly exhibits a different and more advantageous pharmacokinetic profile than the racemic mixture or the (+)-enantiomer of omeprazole. To support that assertion, AstraZeneca submitted clinical studies that, it explained to the Examiner, "involved both the monovalent sodium salt and the divalent magnesium salt of the (-)-enantiomer of omeprazole, thus supporting the full scope of the genus of alkaline salts disclosed in the application and as claimed herein."

(record citations omitted, emphasis in opinion).

The Court did not find the italicized language in the patents' prosecution history to be sufficient to overcome the intrinsic limitations in the language of the specification and broaden the scope to alkaline salts to be greater than the six expressly recited cations (the Court characterizing this as a "substantial expansion" of claim scope).